Sacco grapples with Sh300m debt owed by housing cooperative

A savings and credit cooperative society is grappling with bad and doubtful debts from its members and a past partnership with a land-buying company.

Anchor Premier Sacco Limited directors say they are now owed Sh300 million by a housing cooperative.

This is an estimated 98 per cent of the previously reported outstanding balance is held by the housing cooperative, following accounts reconciliations by directors of the two institutions.

Speaking during an annual general meeting held in Thika over the weekend, Anchor Sacco chairman Joseph Mbai said his board is pursuing the debt aggressively.

“The management board shall continue deliberations in the future with the housing cooperative to close the matter and discuss the deliverables,” he said.

Mbai said Anchor Sacco has over the last year managed to reduce all non-performing loans by about two percent.

In mid-2022, the Sacco engaged a debt collector who has since improved loan repayments.

“However, the management committee continues to remind members of their obligations to repay their loans on time to maintain their positive credit profile with the sacco and avoid being listed negatively with the Credit Reference Bureaus,” he added.

During the year ended December 2023, membership grew to 10,023 members after 110 new members joined the Sacco.

Dormant accounts are also being re-activated, driving membership deposits by more than Sh4 million in the past 12 months.

Presenting the financial statements, Treasurer Paul Thuku said net profits jumped by 54 per cent to Sh3.2 million last year, but share capital and savings rose only marginally, by 6.4 per cent and 2.6 per cent respectively. 

“The society fell short of its disbursement goals due to the failure of some members to repay in good time as the housing loans, which have proved challenging,” he said.

Five members with a total exposure of Sh15 million have been taken to a tribunal and the cases are headed to an auctioneer’s desk.

Already, two vehicles and a motorbike have been repossessed and sold to assist in improving liquidity.

Going forward, the sacco has opened a new company, Anchor Premier Venture, as a vehicle for members to acquire land and to also expand the saccos revenues.

Already, projects are on offer in Malindi, Nanyuki, Gilgil, Gatuanyaga (Thika) and Kajiado.

A van purchased recently is assisting in marketing the new projects by ferrying prospective buyers to these sites.

Additionally, sacco has opened an insurance agency to advise and help in the insurance of Sacco’s assets, those of members and any other willing clients.

“Eldoret and Nakuru offices have also been merged as a cost-cutting measure. We reduced administrative costs by over Sh7 million as per the financial statements,” Thuku said.

Although Sacco advanced loans amounting to Sh43.6 million last year, due to the slow debt collections, the company is struggling to issue new loans.

“The Sacco finances all the members’ loans from its collections only. We will soon seek permission from members to borrow some amounts to assist in clearing the backlog of loans at our desks. Members are also welcome to loan us any extra funds they might have,” the chairman said.

Thuku said a long-standing tax dispute with the Kenya Revenue Authority has been finally resolved and Sh488,000 was paid to the tax man.

More than 30 members, who have been affected by the previous unavailability of plots notably from the Nanyuki and Malindi projects,   have also been resettled from recovered plots.

Members of the Sacco approved a budget for the next financial year, which projects to grow the income to Sh3.7 million from an income of Sh45 million.

Thika West cooperative officer Catherine Mbuki urged members to pay their loans promptly to enable others to benefit from the same.

 “I urge members to pay up their loans in good time so that others can get the same for the prosperity of the Sacco,” said Mbuki.