Co-operative Movements (Saccos)

By Steve Biko / Published March 3, 2015 | 3:17 am


……Flipping through the listed companies in Nairobi stock exchange list….and interesting bits like this:

  • The oldest in the banking industry……..Kenya Commercial Bank
  • The oldest composite insurance company for over 70 years ……….Jubilee insurance
  • The better Option: Safaricom is a leading provider of converged communication solutions
  • Access Kenya Group…….., Kenya’s first publicly listed ICT company and leading Corporate Internet Service Provider
  • The largest share issue in the history of Nairobi Stock Exchange: the privatization of Kenya Airways in 1996.
  • The first companies to be listed on Nairobi Stock Exchange:
  • Kakuzi ltd
  • Sasini Tea and Coffee Limited
  • Unilever Tea Limited
  • Car and General Kenya Limited
  • Kenya airways
  • TPS Serena
  • CMC Holdings
  • British American Tobacco Kenya
  • British Oxygen Company(K)Ltd

The list is endless with each listed company striking out in the sectors and surely gracing the history of Kenyan Economic Freedom.
As an analyst It is almost impossible to narrow my watch to a single company’s stocks especially in the diversified sectors: Agricultural, industrial and Commercial services because of the risk averse nature of investors which requires that their portfolio are diversified to the fullest with negative correlation:

I therefore not dare the accuracy of information in the rather trace our roots of cooperation to financial liberation that is the cooperative movement that is and still is the ultimate economic catalyst.

One Aspect of the Kenyan Economic Freedom draws my attention to the ‘Harambee Spirit ‘………Kuungana or Cooperation……

The evolution of Cooperative movement in Kenya is an interesting watch:

Dating back from traditional society where our ancestors helped each other to improve their well being, materially, socially and morally..

Example: Kingarua among the Taitas,Mwetheya..the Kamba ‘s and the Ngwatio for the Kikuyu

It is indeed a revolution with the gurus in the Pre colonial Period.. Kenya creameries Ltd (KCC),Kenya farmers association(KFA) crumble in the Moi Regime.Post colonialism led to a rapid growth in Cooperatives with the acts changing drastically to the recent 2007 amendment which cleared up the tag of war between the government involvement in cooperatives (Independence)


In the dawn of aliens and spaceships man will still be a social being so say our scientists, solitude in death alone is enough proof but who can tell about the after life. The beauty of history is that it never dies:

The cooperative version of the 21st Century is:

Co-operatives are at the core business of this bank, they are their strategic shareholders, they are their single largest customer base, and they remain the key focal point of their strategy.

  • The Co-operative Movement is the strategic and anchor shareholder in the Bank. The movement holds a majority 65% stake through Coop Holdings Co-operative Society Limited, which holds the stake on behalf of 3,080 co-operative societies and unions with millions of individual members.
  • One in every five Kenyans is a member of a co-operative. Providing banking services to the co-operative movement is therefore a sure way of banking majority of Kenyans.
  • The Co-operative Model of resource creation, mobilization and management is one of the most equitable means of wealth management in any society, as it fosters a system of equal and affordable access to opportunity and equitable sharing of the benefits that discourages inequitable concentration of wealth.
  • It is likely that the huge ‘brick-and-mortar’ costs of setting up branch outlets will discourage majority of the mainstream banks from providing financial services across all regions of the country. Co-operatives can therefore provide a reliable alternative provider.


2008: The bank lists on the Nairobi Stock Exchange on December 22. The listing follows a public offer of 701.3 million shares at Kshs 9.50 which achieves an 81% subscription to raise Kshs 5.4 billion in additional capital on top of the existing Kshs 7.4 billion. This is made possible as the bank’s special general meeting on 27th June approves conversion of the bank to a limited liability company from a co-operative society that it has been since inception in 1965. All previous shares held by the Co-operatives are ring-fenced under the Co-op holdings Co-operative Society Limited which becomes the strategic investor in the bank with a controlling 65% stake.

2007: The Bank realizes complete turnaround by recording a Kes 2.3 billion profit before tax for year 2007, as compared to the Kes 2.4 billion loss for year 2000. The Bank also declares a dividend of 8% which translates to Kes 8.00 per share, the highest payout in many years.

2006: The Bank launches Sacco Link, a robust IT system that integrates the banking systems of Saccos with those of the Bank, to enable the members of Sacco get access to banking services from the service outlets of the Bank.

2005: Performance in 2005 maintains the growth trend as the Bank reports a Kes 714 million pre-tax profit, which is an impressive 102% improvement on year 2004. The Bank declares a dividend of 5%, maintaining a consistent enhancement in dividend payout in line with improved performance, from the 3% and 4% paid in 2003 and 2004, respectively.

2004: The Bank maintains a robust growth in profitability and reports a Kes 353 million pre-tax profit, representing a 95% surge on the Kes 183 million posted in 2003. With the good performance, the Bank Board of Directors recommends a divided payment of 4% for the year, up from 3% paid in 2003.

The Bank successfully recapitalizes the balance sheet in the year with a major additional share capital injection of Kes 1.1 Billion from the co-operative movement-based shareholders of the Bank. The shares drive literally doubles the bank’s capital base from Kes 1.2 billion to Kes 2.3 billion.

The Bank leads the market by pioneering mobile banking in Kenya, by launching M-Banking, a banking service delivered via mobile phones. M-Banking enables customers to access their bank accounts and carry out various transactions that include getting bank balances, registering for salary alerts and loading airtime on cell phones, among others.

2003: The Bank sustains its recovery and growth path to report an improved profit of Kes 183 million, an impressive 78% improvement on Kes 103 reported in 2002. The Bank pays a dividend of 3%, a significant landmark that ends a dividend drought that had lasted the previous 7 years.

In October 2003, the Co-operative Bank House is officially re-opened by H.E. President Mwai Kibaki, after renovations occasioned by the 1998 bombing are completed..

2002: The Bank achieves a dramatic turnaround to report a profit of Kes 103 million, a significant improvement from the Kes 802 million loss reported in 2001.

The bank re-occupies Co-operative Bank House after renovations occasioned by the 1998 bombing are completed.

2001: The Bank records a rapid improvement in performance by reporting a significant 60% reduction on the year 2000 loss position of over Kes 2 billion by reporting a Kes 802 million loss for year 2001.

2000: The Bank reports a significant reduction in performance by posting a Kes 2 billion loss for year 2000.

The bank interconnects all branches countrywide and becomes only the second bank in Kenya to offer fully centralized banking.

The bank signs a contract with Money Gram International in October 1998, and becomes the agent for the company’s international funds remittance business.

On August 7th, the bank suffers a major setback from a terrorist bombing that completely guts the Bank’s Head office, Co-operative House, necessitating a full re-location of the bank to alternative premises. Despite the bombing, suspected to have been targeted at the neighboring Embassy of the United States, the Bank manages to realize a remarkable recovery and retains the confidence of customers and other stakeholders.

1994: The Bank converts to become a fully-fledged commercial bank offering the complete range of financial services beyond the captive Co-operative sector to include personal, corporate and institutional customers.

1989: Major Head Office restructuring is done, most notable of which is the creation of the position of Managing Director who becomes the Chief Executive.

1977: The Bank registers a finance company ‘ the Co-operative Finance Limited ‘ on 16th December 1977 to conduct the business of a financial institution for long-term financial requirements. It opens its doors on 8th March 1993.

1974: The Co-operative Department, which had operated under several ministries since the colonial period, is upgraded to full ministry status as Ministry of Co-operative Development, to further stimulate the growth of the movement.

1968: In this first year of business, the Bank posts a profit of Kes 172,000 from a capital base of Kes 634,000, deposits of Kes 5.3 million and total assets of Kes 5.7 million.

The Co-operative Bank opens for business on 10th January 1968 with a modest capital base of Kes 255,000. The Government supplements the capital with a Kes 214,000 interest-free loan repayable in 10 years. The Banking Act, however, requires banks to have a minimum capital of a ‘staggering’ Kes 2 million. The Government grants an exemption and offers a grace period within which the required capital is to be raised. The Commissioner for Co-operative Development, with the support of KNFC, is obliged to direct that all co-operative society funds invested with other banks be transferred to the Co-operative Bank. The Commissioner further advises that all co-operatives should buy shares in the Bank. This tremendously increases the bank’s deposit and capital base, laying a firm foundation for the bank.

1966: The 1945 Ordinance is replaced with the Co-operative Societies Act. The main essence of the Act was increased oversight of the co-operative movement by the government.

Co-operative Bank of Kenya is registered as a co-operative society on the 19th June 1965. It does not however commence operations as it is not registered under the Banking Act. In this status, it cannot fulfil the main objective for its establishment, which is to mobilise financial resources and provide banking services to the co-operative movement. The Bank applies for a banking licence to operate under the Banking Act, which is granted later on in 1968.

Sessional Paper No. 1 titled African Socialism and its Application to Planning in Kenya is unveiled. In this document, co-operatives are seen as very important tools for development.

1964: Due to the need to bring about a more efficient and effective co-ordination of both internal and external assistance in addition to providing relevant financial services to the co-operative movement, the Government considered the idea of setting up of a co-operative bank. It is deemed necessary to conduct a survey to ensure the bank is set on sound footing.

As a result of initiative and advice of KNFC, a group of people from the Department of Co-operative Development visit Israel to study ways and means of establishing a viable co-operative bank. The same year, a joint paper by the Ministry of Finance and Marketing & Co-operatives Development recommending the establishment of the bank is issued.

Two Israeli experts also send their recommendations to the Government to that effect. The Government accepts the recommendations and makes arrangements to have established banks to support it. Consequently, an official from Standard Chartered Mr D G Landells is appointed General Manager to assist with the establishment of the Co-operative Bank of Kenya Limited.

The co-operative movement witnesses a structural change with the formation of the Kenya National Federation of Co-operatives (KNFC) as an apex body to promote the interest of the co-operative movement as a whole.

1945: The 1931 Ordinance is replaced with a new one that allows Africans to participate in and even form their own co-operatives.

1931: The first legislation to specifically govern the registration of co-operatives ‘ Co-operative Societies Ordinance ‘ is enacted. Kenya Co-operative Creameries (KCC) becomes the first co-operative to be registered on 8th February 1931. This is followed shortly by Kenya Farmers Association (KFA) IN 1931, the Kenya Planters Co-operative Union (KPCU) in

1937: and the Horticultural Co-operative Union (HCU) in 1951. However, the 1931 Ordinance did not allow Africans to participate in co-operatives.


The 2008 revolution for the Bank carry with it a unique venture and strategy to Watch :


The Bank is already in a franchising partnership through which we will provide wholesale banking services to individual FOSAs which then provide retail banking services to members. Overview

This operation has the responsibility to deliver financial advisory and consultancy services to selected clientele, notably co-operatives. This service is delivered through two subsidiary companies that are wholly-owned by the Bank, namely:

  • Coop trust Investment Services Limited, which offers fund management services.
    Coop trust is the leading locally owned fund management company with total assets under management valued at over Kshs.17 billion and a client base of over 120 corporate schemes and 600 retail clients as at the close of 2008 The Bank is an Authorized Central Depository Agent and is licensed as a Custodian by the Capital Markets Authority (CMA) and Retirement Benefits Authority (RBA) respectively.They offer outstanding scheme administration services to custodians, fund managers and brokers as well as individual clients. Currently Coop trust manages a total assets in excess of Kshs.7 Billion and administer over 80 schemes. A Central Depository Agent for over 50,000 customers trading at the Nairobi Stock Exchange and a provider of a wide range of Share Registry services to publicly quoted companies and unquoted firms, including those intending to float Bonds and associated commercial papers.
  • Co-operative Consultancy Services Limited, which offers financial advisory services, with specific focus on capacity-building for the co-operative movement.

Financial consultancy services through our wholly-owned corporate finance and investment advisory subsidiary, Co-operative Consultancy Services Kenya Limited.
The subsidiary offers universal advisory services with a special strategic focus on capacity building in the Co-operative movement in liaison with other stakeholders in the sector.
Clientelle base comprises of over 150 Co-operative Societies benefiting from services in the areas of Strategic Planning, Management Evaluation, Information Technology Consulting, Business Organization Review and Human Resources Reviews.

Through a dedicated team of consultants, this subsidiary is the project manager of the bank’s FOSA program roll-out to Saccos.


The Co-op bank’s strategic and majority shareholder is the Co-operative Movement in Kenya with the following key highlights:

* A membership of over 12,000 Co-operative Societies;
* Over 5,000 registered Savings and Credit Societies (Saccos) which are key financial institutions in this country.
* Membership of over 7 million Kenyans with an implied over 50% of our entire population dependant on Co-operative-related activities.
* Total savings by the co-operative sector of over Kshs.170 billion or 30% of our Gross National Savings.

Given these strong pillars the Co-operative Movement has been and will continue to be a key player and participant in the development of the financial markets in Kenya and in particular the Nairobi Stock Exchange (NSE).

The Bank ‘s strategic decision to play a bigger role in the development of the stock market in Kenya is for the reason that vibrant stock market is a critical channel for wealth creation for its people and also a key barometer of its country’s economic performance is the definite trend.

With this key strategic objective of playing a leading role in the Capital Markets, the Bank has successfully concluded discussions to diversify our business now further into stock-broking business by acquiring controlling interest (of 60%) in Bob Mathews Stockbrokers Limited, one of 21 licensed stockbrokers at the Nairobi Stock Exchange (NSE). The company has stable customer base of over 12,000 CDS account holders making them a suitable strategic partner for Co-op Bank as we leverage on our wide distribution network.

Well cushioned by a strong Group balance sheet given their recent re-capitalization at over Kshs.14 billion, Cooperative bank is headed for the top.


Growth is very attractive and is a good indicator. Historic backing makes Cooperative bank is the most realistic and friendly stock to watch: The capitalization base is to the point, the prospects are clearly defined and the touch to the common Mwananchi is almost literally visible.




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