The Success Story of Kwetu Sacco: From a financial depression to a rising giant
An inspiring success story in its own right, Kwetu Sacco’s history is replete with resilience. From its rock-bottom fifteen years ago, it has explicably risen, establishing its position as a leading Sacco nationally.
Its turnaround and restructuring strategy has taken hard work, commitment and prudency from the management and leadership. Their tireless efforts have paid off.
“It has been a long journey full of ups and downs, but we have stayed put and focused on making the Sacco a top-ranking financial service provider satisfying diverse customers,” said Dr Stanley Kyelenzi, the Sacco Chief Executive Officer.
Dr Kyelenzi has been at the heart of Kwetu Sacco’s success story. He had also seen it on the verge of collapse due to mismanagement.
When the hour of reckoning had come, he had the right experience under his belt to change the course of the Sacco. Skills that he had harnessed over the years helped him turn Kwetu Sacco into a thriving financial institution that is increasingly central in the socio-economic empowerment of communities.
Having mastered the art of management at a young age, Dr Kyelenzi has changed Sacco’s business for the better, building a hugely successful institution with global recognition.
Established in 1976 as Masaku Teachers Sacco, the Society rapidly grew, becoming a benchmark centre for others keen to learn about the best loan processing and seamless operations.
“By 1997 the Sacco had become a reference to other Saccos in the country, we were the best on what we did particularly in loan processing considering there was no technology then,” recalled Dr Kyelenzi, who was working as the Public Relations officer.
With the growth came the need to expand, and the idea to put up the Sacco headquarters was initiated to shed the rent burden.
The construction of the Sacco own building started in 1995, and work was completed in 1997.
But the Sacco’s progress became its biggest trap that nearly led to its collapse. The building construction opened a pandora’s box: a window of corruption. Appetite for kickbacks grew bigger; the Sacco leaders then had to look for the next possible project.
According to Dr Kyelenzi, the building gobbled over Ksh42 million compared to other similar or better buildings in the neighbourhood that cost between Ksh8 -9 million.
“In that period Saccos were political and Kenya National Union of Teachers leaders had great say in the management of our Sacco. This in my opinion created a lot of problems for us,” Dr Kyelenzi said.
From 1997 to 2006, the Sacco was in a financial hole. Everything had come to a halt. The collapse was nigh.
“We had to suspend everything. The borrowing had gone through the roof. The Sacco’s woes had become worse; we were in a hole but our managers continued digging. We were borrowing from commercial banks at 13% straight-line and lending at 12% on reducing balance, which was lending at a loss,” he said.
By 2005 the Sacco was in a total mess, a quagmire that looked insurmountable.
The Sacco had diverted from its core mandate to other nonessential activities, depleting its coffers.
“It was terrible, a sad story. I witnessed it firsthand working at the PR office, people would make long queues to get their money, but we had none,” Dr Kyelenzi said.
Regrettably, the Sacco partners sat on the fence, some stoking fire engulfing the Sacco.
When things got thick, Dr Kyelenzi approached Oikocredit with the approval of his manager, a Netherlands-based cooperative society which offers loans or investment capital for microfinance institutions, cooperatives and small and medium-sized enterprises in developing countries. Oikocredit came to their rescue, offering a Ksh170 million loan that was enough to revive the Sacco.
“However, instead of using the money to clear the backlog, the money was channelled to paying suppliers, and only Ksh12 million was left for disbursement to members. We jumped from a frying pan into the fire. The Sacco’s resurrection moment slipped.”
By October 2007, the Sacco was on the brink of total collapse. A huge overdraft meant it could not pay salaries for teachers, most of whom were demanding their refunds, with an accumulated loan backlog amounting to Ksh100 million.
Dr Kyelenzi, who was then the assistant general manager, ascendance to the helm was a baptism by fire. The banks had closed their door for the Sacco, leaving it with no money to give members and, worse, even to pay FOSA salaries. The ‘big guys’ had disappeared into thin air, leaving the junior officers to face the music.
With members growing impatient, angry and violent, an urgent meeting was convened at the cooperative director’s office to elect new leaders, hoping for a reprieve.
Dr Kyelenzi was appointed the acting general manager. “It was not easy to accept the role. With the Sacco situation then, it was a suicidal move. I prayed to God to help me. He has been faithful.”
Aggressive and eager to change the fortune of the Sacco, Dr Kyelenzi took the hard decision, taking the bull by the horns. His first task was to plead with TSC not to stop the payroll, to which they agreed with tough conditions.
“We abolished the old loan backlog. We had to start afresh. For six months in 2008, we had to freeze all activities save for paying salaries and issuing emergency loans. We had to reach an agreement with our members, most of whom wanted nothing to do with the Sacco.”
The Sacco’s revival was an arduous task that he executed with temerity and gusto. Within a year, some teachers had started gaining confidence with the Sacco. “I frankly laid bare everything about our financial predicament, talked to them, and some believed in us and trusted me.”
He admitted it was no easy feat and certainly not without confrontation. Pushbacks came thick and fast at the beginning; people were less willing to buy his ideas. He stuck to his guns, putting in place a set of principles, which meant it was business unusual.
However, despite his efforts, things were not rosy; the payroll amount had drastically reduced to Ksh20 million from a high of Ksh 50 million, with Sacco’s debt amounting to Ksh494 million, some from suppliers of air.
“We strengthened and improved our governance structures, which was our greatest undoing. With time we inspired confidence with our bankers, TSC and other partners who supported our turnaround strategy,” Dr Kyelenzi said, giving a broad smile as a sigh of relief.
Fifteen years later, the Sacco is back on its feet, thriving and scooping top awards in Africa and Europe. Members are a happy lot, empowered and supported to prosperity. From a loan backlog lasting up to a year, members apply, get loans within one hour, and access the money digitally anywhere, anytime.
The Sacco has amassed reserves, and grown its total assets to above Ksh 5 billion, joining the cluster of larger-tiered saccos. Its loan book stood at Ksh3.1 billion at the end of the Financial Year 2022, and members’ deposits were worth Ksh2.7 billion.
“Our monthly loan demands are in excess of Ksh200 million, which we comfortably meet. We have taken time to build the confidence of our members. Spreading positivity is not easy. When spreading the news about a good thing it takes time. Lies spread like bushfires. The Sacco is growing steadily,” affirmed Dr Kyelenzi.
In 2014, it rebranded Kwetu Sacco opening its common bond to serve civil servants, business people, groups, institutions and diaspora members. The membership has grown to over 25,000. The Sacco is duly licensed by the Sacco Societies Regulatory Authority (SASRA) to conduct deposit-taking business. It always rewards members with reasonable annual returns from their investments yearly.
Employed by the Sacco at age 26 and now at 58, two years away from retirement, Dr Kyelenzi is influencing those working under him to embrace integrity, transparency, professionalism and good governance. By encouraging the younger generation to embrace good financial habits, he is creating a legacy that will endure.
His turnaround strategy has worked, and the Sacco is now an immense source of pride for many. He has not done it single-handedly but credits the achievement to his Board of Directors led by Mr Julius Nzyoka and staff members.
“Ultimately, the Sacco owes its success to its members the reason customer focus sits at the heart of Kwetu Sacco’s actions,” he averred.
Dr Kyelenzi joined Sacco in 1993 as a senior accountant; he will leave a happy man.
“My future plan which is integrated into our Strategic Plan is to grow Kwetu Sacco beyond the bank levels, such that we can support our communities and bail them out of the chains of shylocks. The commercial world is very harsh, if only people realize the role played by Saccos no one will go to predatory financial institutions. Some of them are too exploitative with interest of up to 600%,” he said.
“In Africa, a very small problem may put you into an even bigger one. A person may buy an item worth Ksh5,000 at Ksh50,000 on credit, without thinking about the consequences. There are so many walking millionaires but without any single cent,” he explained, adding, “The biggest problem we are servicing at the Sacco is a bailout, we have bought commercial loans for our members such that we have become enemies of these predatory institutions.”
He urged people to avoid immediate gratification but reflect on the consequences. He noted taking any available loan can make one an enslaved person. The Sacco has taken an educative approach in lending to members.
“We are talking to our members about their financial wellness because some people do not care about it. If you can do a lesson plan in school, you should do one for your life. With a little salary, you can navigate your life with happiness and create hope for the future. Appreciate your salary and plan, you will make a million from your little salary by joining a Sacco and saving the little you can. Do not overstate your expectations. Fix your money and grow it gradually,” Dr Kyelenzi advised.
