WCUC 2019 breakout session focuses on development of a digital financial product for SACCOs


World Council of Credit Unions (WOCCU) and Visa not only see the need for both Kenyan consumers, and small and medium enterprises (SMEs) to have more access to digital financial tools—they’re also working together to come up with an innovative solution.
WOCCU VP of Financial Inclusion Megan O’Donnell joined Visa Head of Community Accounts Douglas Leighton and Visa Senior Director for Merchant Segment Strategy Todd Mazurek for a 2019 World Credit Union Conference breakout session on a new digital financial product they are designing for the underserved Kenyan market.
While digital financial tools such as mPesa currently serve much of the population in Kenya, for many savings and credit cooperatives (SACCOs) in the country, these products are still too expensive or not available.
“Though technology has expanded access to finance dramatically, there are still big gaps in the market," said O'Donnell. "We at WOCCU try to work with our partners to fill these gaps. We want businesses to come in and create useful services for credit unions (SACCOs) so they can operate more efficiently, and we want to build a sustainable market. So, if WOCCU can come in and match-make or help with the research, we're happy to do that."
The new financial product is still in concept phase. In June, representatives from three Kenyan SACCOs—Universal Traders, Fortune and Siraji—joined professionals from the Kenyan Union of Savings and Credit Cooperatives Ltd. (KUSCCO) and WOCCU at the Visa Innovation Center in Dubai to map out a development strategy.
They identified text-to-pay capabilities, affordability and a broad network for services as some of the key factors for the product's ultimate success.
At Tuesday's breakout session, World Council Board Director and KUSCCO CEO George Ototo said, to be viable, the new tool would have to:
•    limit the number of transaction charges
•    provide a way to track transactions
•    allow for mobile point-of-service sales
“While we're developing the business case, we're also working on some logistics around licensing and, ultimately, how we bring this to life via a digital app. So, those are the next steps," said Leighton.
Once the digital tool is ready, Visa hopes to implement a pilot program at select SACCOs to test it out.

Preparing for the future
If credit unions operate with a “business as usual mindset”—they do so at their own peril. That was the message Adam Lee, incubator director at the Filene Research Institute, imparted to attendees of
his breakout session “Credit Unions in the 21st Century.”
Lee reviewed the findings of the Filene Institute’s recent research to show credit unions must evolve along with the significant shifts in consumer demographics, income inequality, the nature of work and technology, if they want to remain relevant and thrive in the future.
"What about our brothers and sisters from Africa who are here? What are you seeing in your country? A lot of the data that I've seen from countries like Niger, Mali, Uganda, Angola, Zambia—they have a median age of 15 in their nations," said Lee. "What's going to happen as credit unions in those countries are serving a massively younger population?"
Lee said different opportunities and challenges await credit unions in Europe and the United States, where the elderly populations are growing.
"We had a credit union service organization executive in the United States say that every American is going to outlive their retirement," said Lee. "What does that mean for older Americans to make ends meet? They need smaller-dollar lending services, they need debt consolidation, savings and planning."
The week ahead
The World Council Young Credit Union Professional (WYCUP) Program will award five scholarships to highlight the final day at WCUC 2019. Each scholarship provides an all-expense paid trip to the 2020 World Credit Union Conference to be presented by World Council and the Credit Union National Association (CUNA), July 19-22, in Los Angeles.
Global security expert Mikko Hypponen will give the final keynote address of WCUC 2019, speaking on cybersecurity, cryptocurrency and the future financial landscape facing credit unions.
Follow conference activities and see daily event photos on Facebook, Twitter and Instagram with #WCUC2019.
The 2019 World Credit Union Conference is presented in collaboration with the Caribbean Confederation of Credit Unions (CCCU). It runs through Wednesday, July 31.
Source: http://www.woccu.org/newsroom/releases/WOCCU_and_Visa:_Collaborating_on_Payments_Innovation_for_Kenya?fbclid=IwAR1CvHl0kcsVGqxthutAwBpj5agVwZRR7ot5D3TpTUMi1NikAk-jWZaG3Pw

The collapse and financial challenges facing some Savings and Credit Co-operative Societies (saccos) have sparked anxiety in the trillion-shilling sector.

A number of saccos are facing liquidity challenges and are at the risk of going under.

And now, the government is under pressure to speed up regulations to help rein in saccos that have defrauded members.

 

According to the Department of Cooperatives, there are 23,000 registered cooperative societies, which share among them 14 million members. Collectively, the cooperatives hold Sh732 billion of member savings, control an asset base of Sh1 trillion and a Sh700 billion loan portfolio.

Kenya’s cooperative movement is ranked high in Africa and is one of the best globally due to its asset base.

Despite the rosy picture, the insistence for better management of cooperatives betrays the anxiety of the sector in the back of the collapse of a number of saccos.

 

Weak legislation

Weak legislation, poor financial management, leadership and governance have doomed a number of the cooperatives to failure.

Some such as Metropolitan Sacco are on the red line while others such as Nitunze Sacco and Ekeza have gone under, and with them the lifeline of thousands of their members.

As Kenya marked the 97th International Co-operative Day at the Kenyatta International Convention Centre (KICC) yesterday, President Uhuru Kenyatta said the government will increase policy interventions to fix loopholes in the sector.

“I direct the Ministry of Industry, Trade and Co-operatives to fast-track the formulation of the National Co-operative Policy and immediately operationalise the proposed Sacco Societies Fraud Investigation Unit (SSFIU) within the Sacco Societies Regulatory Authority (SASRA),” said the President.

Restructuring SASRA is one of the recommendations in the proposed National Co-operative Development Policy, which is currently being considered by Cabinet.

“The government recognises the need to strengthen enforcement and therefore proposes to restructure SASRA to allow it regulate all financial cooperatives,” the draft policy states.

Industry, Trade and Co-operatives Cabinet Secretary Peter Munya concedes that the decentralisation of cooperative management brought on challenges that the State hopes the new policy will cure.

Closer cooperation

“Since 2013 when the devolved system was implemented, challenges have emerged in the management and supervision of the co-operatives that call for closer cooperation between the national and the county governments,” Munya said.

If ratified, the policy will also give a clear separation of duties between the county and national governments.

Richard Nyakenogo, the Group General Manager for Co-operative Business at CIC Group, said a distinction of the roles undertaken by the two governments would align the sector.

“It is a critical thing at the moment because if governance is not properly aligned in the government sector the cooperatives cannot thrive. There is every need for the two arms of government to ensure there are clear policies that are assisting the running of these institutions,” Nyakenogo said.

 

Source-The Standard

https://www.standardmedia.co.ke/article/2001334682/uhuru-roots-for-policy-to-tame-rogue-saccos

Kenya’s cooperative movement is ranked the best in Africa and seventh best globally with an asset base of more than Sh1 trillion.

To enhance the contribution of saccos in the economic growth of the country, the President said the Government will increase policy interventions to fix identified loopholes in the sector.

“I direct the Ministry of Industry, Trade and Co-operatives to fast-track the formulation of the National Co-operative Policy and immediately operationalize the proposed Sacco Societies Fraud Investigation Unit (SSFIU) within the Sacco Societies Regulatory Authority (SASRA),” said the President.

President Kenyatta further called for the fast-tracking of the process of establishing a central liquidity facility which will enable saccos to participate in the national payment system and allow them to come up with more innovative products their members.

“Our Goal as government is to serve as facilitators and enablers, to clear the path for co-operatives so that they and their members can realize their full potential,” said the President.

He acknowledged the central role played by SACCOs in the economic stability of the country noting that cooperatives in Kenya have mobilized members’ savings and deposits in excess of Sh732 billion, feature an asset base of approximately Sh1 trillion and hold a loan portfolio of Shs 700 billion.

“Directly and indirectly, co-operatives account for 45% of Kenya’s Gross Domestic Product and 30% of national savings and deposits,” the President said.

The Head of State spoke at the Kenyatta International Convention Centre where he addressed celebrations to mark the 97th International Co-operative Day.

The President who had earlier in the morning joined thousands of dairy farmers at the inauguration of the revamped New KCC Dandora Factory and, presided over the official opening of NACHU Plaza and Mwalimu Towers respectively, said cooperatives play an integral role in fostering national unity besides their invaluable contribution in building individual as well as national prosperity.

“The cooperative sector is a towering example of what can be achieved through unity, through coming together for the common good, through hard work, enterprise, sacrifice and unyielding commitment to positive goals,” said the President.

The Head of State said the cooperative sector is one of the key partners in the achievement of the Big 4 Agenda programmes covering decent and affordable housing; affordable healthcare for all; food and nutrition security for all Kenyans and job creation and economic growth through manufacturing.

On housing, the President said the government is partnering with the cooperative sector to ensure that as many Kenyans as possible enjoy the dignity of owning their own decent homes.

“I am informed that with over 1,980 housing/investment cooperatives with an asset base of Sh31 billion, cooperatives are an ideal vehicle to provide at least 25% of the 500,000 new houses required across the country,” said the President.

Source: Capital FM

https://www.capitalfm.co.ke/news/2019/07/504788/

Digital Taxi Drivers are planning to operate under saccos like their counterparts in the matatu sector.

Mr John Kimani, President Digital Taxi Forum on Monday said this will give drivers and vehicle owners a voice and a chance to engage with the App companies and government agencies.

“Currently the App companies are dictating the working model which is skewed in their favour,” Mr Kimani.

He says the sacco model will ensure all parties operate from mutually agreed parameters.

“To check the proliferation of dubious saccos and compliances, we propose to form an association of online taxi saccos. This association will ensure all online saccos adhere to a set of rules and regulations,” Mr Kimani.

TECHNICAL SUPPORT

They also sought for technical support from government agencies responsible for transportation and online operations, to form, develop and adopt a cashless system which they feel will add value to the online operators and App companies.

The Digital Taxi Drivers downed their tools on Monday to push for implementation of better pricing by dominant app companies, which they accuse of ignoring terms of a deal entered into in July, last year.

Their Monday protest was temporarily disrupted after police lobbed teargas canisters to disperse their gathering at Uhuru Park, Nairobi. They later reassembled and continued with their boycott.

They claimed, US-based Uber and Estonian software firm Taxify (Bolt), had refused to negotiate in good faith with the drivers’ representatives regarding the various changes they had made without proper consultations.

SH42 PER KM

The Digital Taxi Drivers and partners want to earn Sh42 per kilometre, and Sh4 per minute for 1300cc engine vehicles and below. Currently, Uber charges Sh16 per kilometre and Sh2 per minute.

Bolt on the other hand charges Sh14 per kilometre and Sh2 per minute.

Source: Daily Nation

https://www.nation.co.ke/news/Digital-Taxi-Drivers-seek-to-operate-under-saccos/1056-5197430-q967md/index.html

Chief Executive Officer George Ototo says the KUSCCO Mutual Assurance targets middle and lower income earners and Sacco members as it seeks to claim a stake in the country’s insurance sector.

Last year saccos across the country had a combined deficit of 100 billion shillings due to increased borrowing and reduced savings from the members.

To mitigate against losses the government and financial stakeholders have been frequently urging saccos to diversify and add more products in their business portfolio to sustain growth.

The new subsidiary, KUSCCO Mutual Assurance will focus on unveiling life insurance policy that targeting the middle and lower earners.

The Sacco targets to raise 1 billion shillings annually in premiums as seeks to penetrate the competitive insurance industry.

KUSCCO is planning to leverage on the membership of its 1,700 saccos under its management to source for its customers and increase its market share.

The cooperative societies have similarly been urged explore opportunities under the government’s big 4 agenda especially manufacturing and affordable housing sectors to diversify their investments.

ISO 9001

KUSCCO QUALITY POLICY

We commit to consistently promote SACCOs through advocacy and provision of quality technical and financial products that exceed the members’ expectations.
We shall comply with the statutory requirements and actively pursue continuous improvement of the ISO 9001:2015 Quality Management System (QMS) processes, capabilities and effectiveness.
In pursuit of our commitment we shall ensure that the quality policy and objectives that have been established and communicated to the Union employees shall be reviewed annually in accordance with the stipulated framework and quality standards.”