“Despite the SACCO providing finance to the community, it was greatly underperforming. In 2016, our credit delinquency was about 70% and we had approximately 3,000 dormant accounts. The Board of Directors tasked me to come up with a solution to fix the problem.”
Eugene realized he needed to find a technical partner to assist him in strengthening the SACCO policies as they had obvious loopholes that needed to be addressed if the cooperative was to improve its performance. “I heard about Swisscontact from one of my comrades. I was interested in the support they were offering cooperatives and approached them to establish if we could work together. The project team was very responsive and soon visited us. We had a very candid conversation about the challenges we were facing and the support we needed to thrive. Some of the challenges included lack of sufficient securities to guarantee loans, increased credit delinquency, lack of cohesion at the management and board level and mismatches between our member needs and our product offering.”
After the discussions and an assessment done in early 2017, it was clear that Kilimo SACCO needed assistance in product development, policy formation and general best practice initiatives.
“Fortunately, Swisscontact agreed to partner with us through its Inclusive Finance Programme as we both held the same vision of increasing access to finance for the bottom poor. The partnership formally began with the signing of a Memorandum of Understanding after which, we hit the road running,” narrates Eugene.
“Together, we have achieved a lot. We have reviewed our institutional policies, strengthened our strategic plan, improved our product offering and revamped our systems through an automation exercise. Swisscontact not only helped us increase our competitiveness in the market but has also linked us to other financial institutions for additional funds,” Eugene happily explains.
The capacity building exercises facilitated by Swisscontact were all-inclusive and involved all the relevant persons, from the board members to the staff and the SACCO members. All nine board members were trained on good governance and equipped with the skills they needed to lead, oversee resources, mitigate the risks associated with lending and the best operational practices to observe. The staff were educated on how to handle activities related to the SACCOs core business of lending, proper customer care, the importance of teamwork, product development, selling and appraisal techniques which did not exist as the institution lacked palpable tools.
‘Frankly, not many staff conducted themselves professionally. After the training sessions, I noted a difference in the way the majority carried themselves and dealt with their clients. The training sessions caused a total shift in the mindsets of the employees which is great for the institution. My work has notably become easier,’ chuckles Eugene, ‘I don’t have to run around overseeing things as much as I used to since my colleagues are more knowledgeable and committed.’
The SACCO members too benefitted from these capacity building sessions. They have been educated on proper financial management, good agricultural practices and the revamped microleasing product. ‘We had begun giving up on the asset finance product we initially had but Swisscontact introduced us to a new model that has not only helped us reduce our credit risk, but also increased the product uptake. Initially, we used to loan the members the monies to buy the assets on their own. Often, the members never paid back as they purchased substandard assets that did not last and therefore, they were unable to generate income and to pay back their loans. Now, we work with asset suppliers and once a member has identified a productive asset for purchase, we pay the supplier directly and hold on to the proof of ownership until the member has completed paying his/her loan. The ownership document is transferred to the members' name once payment has been completed. This simple model has drastically helped us reduce our loan default numbers,’ affirms Eugene.
“Today, Kilimo SACCO boasts of a membership of over 14,000 with more than 90% active. This is tremendous growth from the previous years. Our credit delinquency has dropped to less than 30% and our dividends have improved too. I feel very happy when I see our members providing for their families without any difficulties.”
The business is generally performing well, and the SACCO has recently opened its 8th branch and hired 5 staff to manage its operations. The SACCO has helped the community in many ways – apart from increasing employment, it has aided many farmers access finance which they have used to open or expand their businesses, buy land for farming and increase the education level in the community. Today, the county boasts of having at least 1 literate person per household.
“The sky is the limit for us. After the training, we realized that we needed to benchmark ourselves and carried out a site visit to another SACCO within our locality. After the visit, we understood the importance of modernizing our branches and services. Our management board has recently approved the agency banking model and mobile money integration into our systems which are critical for improving access to finance and ultimately fostering our growth. If I suggested all these new ideas to the board before, they would have quickly dismissed them. After attending the training sessions, they are open to trying new ideas to improve our business,’ explains Eugene.
The Covid-19 pandemic affected many businesses but Kilimo SACCO remained steadfast. They retained all their staff and kept all 8 branches open. Eugene credits their success to the demand-driven product offering. It is positive outcomes like these that keep Eugene and his team looking forward.
The Inclusive Finance Programme (IFP) was financed by Stiftung ESPERANZA, Credit Suisse Foundation, Kanton Basel–Landschaft, Kanton Zurich, Stadt Zurich, among others, and was part of the Swisscontact Development Programme, which was co-financed by the Swiss Agency for Development and Cooperation (SDC), Federal Department of Foreign Affairs (FDFA).