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Saccos remain profitable despite digital disruption : The Standard

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Members of Metropolitan Sacco Ltd line up for their annual dividend payout outside their offices along Koinange street, Nairobi. [Elv is Ogina]

In recent weeks, rumours have swirled around how some Saccos have been hit by a run.

And while it might be true that Mwalimu Savings and Credit Cooperatives (Sacco) might have issues, it is not true that Saccos as a vehicle for lending and saving are on trial.
True, like a savings instrument, Saccos might have lost favour among Kenyans as their mobile phones elbowed them out, according to the 2019 Household Survey. However, Saccos have remained profitable.
Analysis of audited results for more than 100 companies — listed and non-listed — by Financial Standard showed that deposit-taking Saccos were doing well, unlike microfinance banks (MFBs), which made losses.

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Only two Saccos slid into losses. This was a far cry from ten that saw their profits increase. The profit-makers in the year to December 2018 included Kimisitu, Kenya Police Sacco Society, Mudete Factory Growers, Mwalimu National and Stima.
Other Saccos in the list that returned a profit in 2018 were Boresha Sacco Society, Gusii Mwalimu Sacco, Metropolitan National Sacco and Imarisha Sacco Society. The loss-makers included Afya Sacco and Kenversity Sacco Ltd.
Saccos are struggling with a vote of confidence after the Ekeza Sacco scandal that has seen members lose their hard earned cash — while Mwalimu and Stima Saccos have been latched with doubtful investments with industry players saying the malaise seeps deep in the sector.
But Metropolitan Sacco Chief Executive Francis Ng’ang’a says there is nothing to worry about. He says there are many Saccos facing challenges, including dealing with a membership that comes from outside the traditional pool.
Metropolitan Sacco, for example, was supposed to be a co-operative society for teachers, particularly from Kiambu.  It opened its membership to the public, which he reckons brought some positivity in terms of financial strength, but also exposed it to external factors.

SEE ALSO :Probe: Gakuyo presents self to DCI in Ekeza probe

Near collapse
Moreover, Saccos have been hit with a tough economic environment including for Metropolitan Sacco, the near collapse of Nakumatt and Uchumi Supermarkets, which employed lots of their members.
“The fact that most of our members are in the teaching fraternity, any slight change in our finances has serious repercussions to our members who are not teachers,” Mr Ngángá noted.
He reckons that it was such wide linkages to the rest of the economy that normally to some extent tend to have a bearing on their performance.
“We have cushioned ourselves from these economic upheavals and hired a consultant to help stabilise our financial aspect,” said Ng’ang’a.

SEE ALSO :Rogue saccos next target of anti-graft purge

He explained that Sasra had given them licence for 2019. The Sacco has paid almost Sh718 million in dividend to 101,057 members mostly from the teaching fraternity in Kiambu that saw long queues in most of its outlets.
The Metropolitan National Sacco’s assets amount to Sh13.9 billion, while its share capital and deposits stood at Sh7.66 billion as of December 2017.
Sacco earnings have been squeezed by new stringent financial reporting standards. Almost all deposit-taking societies have been hit by the new IFRS 9, which became effective January 2018. 
IFRS 9 replaced the old International Accounting Standard (IAS) 39 for organisations that deal with financial assets, which rather than looking at expected credit loss instead focuses on incurred credit loss.
Saccos Societies Regulatory Authority (Sasra) Chair Sammy Ruto in the supervisory report published last year, also warned that the sector is facing unprecedented competition from mobile lending applications taking away their business.

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“The Sacco sector must brace itself for stiff competition from other financial service providers; particularly, with the growth in popularity of the digital credit services that principally specialises in unsecured micro-credit loans, a forte hitherto associated with Saccos,” Mr Ruto said.
Inadvertently, Saccos also came into competition with banks for deposits after the Banking (Amendment) Act, 2016 set the interest rates payable on deposits held by commercial banks to not less than 70 per cent of the CBK base rate.
Treasury Cabinet Secretary Henry Rotich has dipped his hands into pockets of the small savers with a 10 per cent charge on dividends.
“The government is trying to find revenue one way or another, and because predominantly people trust Saccos more than banks then the government may make substantial amounts from this,” said Kunal Ajmera, Chief Operating Officer, Grant Thornton Kenya.
Already, Stima Sacco, the second largest in the country after Mwalimu Sacco, was forced to reduce interest on deposits from 12 per cent to 10.5 per cent as it sought to be compliant with the new standards.
Stima Sacco new Chief Executive Chris Ngeta Useki said the Sacco provisioned in excess of Sh800 million, noting that they might be beginning to get the hang of the Reporting Standards (IFRS 9).  Stima Sacco has over 114,000 members.
Sheria Sacco provisioned close to Sh41.5 billion after the introduction of IFRS 9 with effect from the year 2018. “In line with the regulator’s guideline to comply with IFRS 9, the society made a provision of Sh41.55 million, being one per cent of the performing loans (Sh4.2 billion),” said Sheria Sacco in its statement.
Network Sacco provisioned for a loss of Sh1.6 million in the financial year ending December 2018. The provision of loan loss was at the rate of one per cent of loan balances as of December 31, 2018.

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SaccoMetropolitan Sacco LtdSaccos Societies Regulatory AuthorityMetropolitan Sacco ChiefTreasury Cabinet Secretary Henry Rotich





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Congo Republic ships first iron ore ahead of expected production boom : The Standard

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Iron mining in Congo. [Photo, Courtesy]

Congo Republic shipped its first iron ore exports on Friday ahead of an expected boom in production from mines owned by Congolese billionaire Paul Obambi’s Sapro SA and Swiss commodities giant Glencore.

Sapro mined the oil-dependent Central African country’s first iron ore in 2017 from its Mayoko project in the southwest and plans to reach output of 12 million tonnes per year by 2022.
Glencore’s joint venture with British Virgin Islands-incorporated Zanaga Iron Ore Co plans to ship 2 million tonnes of iron ore per year over the next two years, and 30 million tonnes by 2024.
Sapro, the Congolese government and British shipping company Ashley Global are also spending a combined $550 million on rehabilitation to Pointe Noire’s deep-water port, the Mayoko mine and an old railway track connecting the two.
At a ceremony on Friday in Pointe Noire attended by the mines minister, a ship loaded with 23,000 tonnes of ore set sail for China, where it will be processed for a European buyer.
“We are heading towards more than a century of production,” said Obambi.
Iron ore prices are near their highest in two years, spurred by growing demand from China and the collapse in January of a dam operated by Brazil’s Vale, which has cut into global output.
Congo’s economy has been hit hard in recent years by low crude prices, which led its debt to balloon. It is currently negotiating with the International Monetary Fund to try to secure a bailout. 

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NMG shareholders to earn $9.42m after $10m profit

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By BRIAN NGUGI
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Nation Media Group shareholders are set to earn Ksh942.7 million ($9.427 million) after the company declared a dividend of Ksh5 ($0.05) per share for the year ended December 31, 2018.

The group weathered a difficult business environment across the region to post a Ksh1.06 billion ($10.6 million) profit after tax, down from Ksh1.35 billion ($13.5 million) the previous year, a 21.8 per cent decline.

Addressing an investor briefing in Nairobi board chairman Wilfred Kiboro said NMG had shown resilience in a challenging environment marked by delays in payments, especially from the government, coupled with depressed regional economies, which impacted circulation volumes and advertising revenues.

The Group’s performance was adversely impacted by its decision to discontinue government advertising from July 2018 due to delays in settling outstanding debts.

Notably, part of the debt, amounting to Ksh304 million ($3 million) was paid in February this year by the Government Advertising Agency, GAA.

The group’s turnover stood at Ksh9.66 billion ($96.6 million), down from Ksh10.62 billion ($106.2 million) in 2017, a 9.1 per cent decline.

However, Mr Kiboro expressed confidence that the group will post a stronger performance this year, on the back of new and diversified revenue streams and an improved operating environment.

He said that NMG will continue to invest in the development of additional digital inventory to ride the wave of disruptions experienced by print media platforms across the world.

The group plans to invest Ksh200 million ($2 million) to develop additional digital inventory as part of its revenue diversification plan.

NMG digital platforms rose to 37.2 million unique monthly users in March 2019, from 32.3 million in March last year.

“Profit is not what drives the Nation Media Group,” said Mr Kiboro. “Profit is important, but our values and our philosophy are what we need to serve the greater good of society.

“However, in carrying out our mission, we have to operate sustainably as shareholders expect a positive return on their investment.”

Last year, the group diversified into music, with the launch of Lit Music, a record label for artistes, and LIT360 product offerings that include a TV show and a digital platform.

KenyaBuzz, an e-commerce-enabled experiential platform for movies, events and ticketing will be revamped in Kenya, and rolled out to Uganda and Tanzania.

Group CEO Stephen Gitagama said a diversified business strategy would bring in new advertising revenue and shore up the company’s growth.

“We will diversify our revenue streams while protecting our legacy income,” said Mr Gitagama.

“We will give our consumers highly desirable content that fits into their worlds wherever, however and whenever they need it.”

He added that the group had identified a Tanzanian shareholder in compliance with the regulations that require media companies to be majority-owned by locals.



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Astronauts capture view of Earth from space : The Standard

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The UK from space (Image: PA)

It’s a view that only a few people will see in their lifetime, but now astronauts have given us a glimpse of the view of Earth from space.

NASA has revealed an image of the UK, taken by astronauts on board the International Space Station(ISS) on February 26.
When the image was taken, the ISS’s altitude was 214 nautical miles away from Earth.
For comparison, this is around the same distance it takes to drive from central London to Manchester by car via the M40!

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A Nikon D5 was used to snap the shot, with a 17-35mm zoom lens, looking through a window of the International Space Station over the sea between Wales and Ireland.
Last year, the International Space Station celebrated 20 years since it was first launched, though the first batch of long-term residents did not arrive until two years later in November 2000.
In its lifetime, the station has been home to 236 astronauts.
This includes British ESA (European Space Agency) astronaut Major Tim Peake, who was an inhabitant from December 15, 2015 until June 18, 2016.

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