Co-operatives assets surge to Sh1 trillion

Business Daily Kenya:  Nicholas Waitathu  @PeopleDailyKe The multi-billion shilling co-operative sector has the financial muscle to undert...

Business Daily Kenya: 

Cooperative Bank managing director Gideon Muriuki during the release of third quarter financial results yesterday. Photo/HELLEN MUTURI

Nicholas Waitathu @PeopleDailyKe

The multi-billion shilling co-operative sector has the financial muscle to undertake some of the mega projects outlined under the Vision 2030, a senior government official says.

Principal Secretary for Co-operatives Ali Noor Ismail said savings and co-operative societies (Saccos) control an asset base of about Sh1 trillion, resources enough for the sector to invest in viable institutions identified for privatisation.

Since the government launched the development blueprint in 2008, it has been mobilising resources from large private sector players and donor community.

Further, Ismail discloses that strategies are being explored to have Saccos listed on Nairobi Securities Exchange (NSE) to enable them raise more finances to undertake the projects. Listing, he says will also open up the credit unions to new investors.

Ismail told People Daily the movement has gained necessary strength to pool resources together to undertake new businesses.

“Co-operatives should be encouraged to apply the co-operative principle on co-operation among various players by pooling resources together either through ventures or mergers,” he said.

The pooled resources, he added, will provide adequate finances necessary to implement mega projects including infrastructure developments like metropolitan light rail systems, power generation and distribution, roads, modern housing estates and mining.  

Ismail says the Sacco sub-sector has mobilised domestic savings in excess of Sh600 billion and its Sh1 trillion asset base is enough to finance construction of 25 Nairobi-Thika superhighway at a cost of Sh32 billion each.

Co-operatives, the PS said are currently controlling over 30 per cent of national savings and contributing over 40 per cent of the Gross Domestic Product (GDP).

According to Industry, Trade and Co-operatives Cabinet Secretary Adan Mohamed the movement has demonstrated its competence through steady savings mobilisation, strong governance structures and growing membership. This, he said renews the market players’ confidence in dealing with the co-operative sector and more so prompting the former to undertake new businesses.

Ismail said success of the sector has been enabled by government’s enthusiasm to enforce economic reforms.  “The government has been able to implement sound strategies focusing on encouraging youth and women, opening of new businesses and encouraging mergers and acquisition,” he added.

These reforms, the PS said have yielded results as can be attested by the now vibrant co-operative movement in the country.

“This has led to the movement being ranked in position one in Africa and seventh in the world with some of the local Sacco’s equally ranked the best in the continent,” Ismail said. For example, Mwalimu National Sacco has an asset base of over Sh37 billion, making it the largest savings and credit union in terms of assets in Africa currently. 

The Sacco in early 2015 acquired  51 per cent stake in Equatorial Commercial Bank at a cost of Sh1.6 billion making it the majority shareholder. The bank has rebranded to Spire Bank and announced plans to review its business units operations as it targets to move from tier-three to tier-two in five years.

In some sectors of the economy, co-operatives are controlling substantial stake, for example, the movement controls more than 80 per cent of the Kenyan coffee value chain.

The post Co-operatives assets surge to Sh1 trillion appeared first on Mediamax Network Limited.

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