safaricom sacco ltd

SAFARICOM SACCO LTD ANNUAL REPORT 2020
We dedicate this page to friends , family , colleagues and the entire world affected & succumbed to COVID-19 pandemic.
May your souls live on !
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Core Values-Customer Focus, Integrity, Reliability, Innovation
Mission-To transform our members’ lives through provision of affordable, Innovative and accessible financial services
SAFARICOM SACCO LTD AT A GLANCE
Notice of the Annual General Meeting 3
Safaricom Sacco Board 4
Safaricom Sacco Management 5
Chairman’s Statement 24 - 26
CEO’s Statement 27
Committees Annual Reports 32 -44
Supervisory Committee Report 45 - 48
Budget 49 - 50
Table of Content
T H E 2 0 T H A N N U A L G E N E R A L M E E T I N G T H E 2 0 T H A N N U A L G E N E R A L M E E T I N G
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AGM NOTICE 2021
Notice is hereby given on 12th February, 2020 to all members of Safaricom Sacco Society
Limited,that the Annual General Meeting for the year ended 31st December, 2020 shall be
held on Saturday,27th February 2021.
The Agenda shall be:
2. Report from the Chairman
3. Address by the Chief Guest.
4. Report from the Supervisory committee
5. Presentation of the 2020 Audited Financial Statements
6. Presentation of the year 2021-2022 Budget
7. Appointment of Auditors
9. Resolutions
10. Elections
Alex Okoth
Hon. Secretary
Safaricom Sacco Board 4
Safaricom Sacco Management 5
Chairman’s Statement 24 - 26
CEO’s Statement 27
Committees Annual Reports 32 -34
Supervisory Committee Report 45 - 48
Budget 49 - 50
Table of Content
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MANAGEMENT
PAULINE W. GICHUKI Finance Manager
ANNITA MUTHANJE Marketing & Customer Service
Manager
Manager
Manager
BOARD MEMBERS
SUPERVISORY COMMITEE
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MANAGEMENT
PAULINE W. GICHUKI Finance Manager
ANNITA MUTHANJE Marketing & Customer Service
Manager
Manager
Manager
BOARD MEMBERS
SUPERVISORY COMMITEE
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SAFARICOM SACCO LTD BOARD AND COMMITTEE MEETINGS ATTENDANCE
Names Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Total Paul Msava 1 1 1 1 1 1 1 1 1 1 1 1 12 Connie Khayundi 1 1 1 1 1 1 1 1 1 1 1 1 12 George Hunja 1 1 1 1 1 1 0 1 1 1 1 1 11 Alex Okoth 1 1 1 1 1 1 1 1 1 1 1 1 12 Geoffery Gekonge 1 1 1 1 1 1 1 1 1 1 1 1 12 Peter Chege 1 1 1 1 1 1 1 1 1 1 1 1 12 Leonard Okoth 0 0 1 1 1 1 1 1 1 1 1 1 10 Pius Musyoki 0 0 1 1 1 1 1 1 1 1 0 1 9 Elizabeth Mudogo 0 0 1 1 1 1 1 1 1 1 1 1 10 Bernadette Mutune 1 1 0 0 0 0 0 0 0 0 0 0 2 Johnstone Kamunde 1 1 0 0 0 0 0 0 0 0 0 0 2 Collins Ogutu 1 1 0 0 0 0 0 0 0 0 0 0 2 Joseph Njoroge 1 1 1 1 1 1 1 1 1 1 1 1 12 Pamela Nyakoah Osore 1 1 2 Boniface Muthoka 1 1 1 3 Joshua Kimani 1 1 2 Patrick Nduati 1 0 0 1 Finance and Administration Committee Paul Msava 1 1 3 2 1 1 1 1 1 1 1 2 16 Alex Okoth 1 1 3 2 1 1 1 1 1 1 1 2 16 Connie Khayundi 0 0 3 2 1 1 1 1 1 1 1 2 14 Geoffrey Gekonge 0 0 3 2 1 1 1 1 1 1 1 2 14 Johnstone Kamunde 1 1 0 0 0 0 0 0 0 0 0 0 2 Bernadette Mutune 1 1 0 0 0 0 0 0 0 0 0 0 2 Audit and Risk Committee Leonard Okoth 0 0 1 1 1 1 1 1 1 1 1 1 10 Alex Okoth 1 1 1 1 1 1 1 1 1 1 1 1 12 Elizabeth Mudogo 0 0 1 1 1 1 1 1 1 1 1 1 10 Geoffery Gekonge 1 1 1 0 0 0 0 0 0 0 0 0 3 Peter Chege 1 1 0 0 0 0 0 0 0 0 0 0 2 Business Development Committee Connie Khayundi 0 0 1 1 1 1 1 1 1 1 1 1 10 George Hunja 0 0 1 1 1 1 1 1 1 1 1 1 10 Elizabeth Mudogo 0 0 1 1 1 1 1 1 1 1 1 1 10 Bernadette Mutune 1 1 0 0 0 0 0 0 0 0 0 0 2 Collins Ogutu 1 1 0 0 0 0 0 0 0 0 0 0 2 Credit Committee George Hunja 0 0 1 1 1 1 1 1 1 1 1 1 10 Pius Musyoki 0 0 1 1 1 1 1 1 1 1 1 1 10 Peter Chege 0 0 1 1 1 1 1 1 1 1 1 1 10 Collins Ogutu 1 1 0 0 0 0 0 0 0 0 0 0 2 Connie Khayundi 1 0 0 0 0 0 0 0 0 0 0 0 1 Nomination Committee Kennedy Auka 1 1 1 3 Phyllis Mutua 1 0 0 1 FCPA Samuel Okello 1 1 1 3 Theresa Mruttu 1 1 1 3 Hesbone Kiura 0 1 1 2 Supervisory Committee Pamela Nyakoa Osore 1 1 1 1 1 1 1 7 Boniface Muthoka 1 1 1 1 1 1 1 7 Joshua Kimani 1 1 1 1 1 1 6 Patrick Nduati 1 1
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4. SACCO Supervisory Committee
5. SACCO Nominations Committee
7. Invited Guests
8. SACCO Staff
Master of Ceremony:
- Joseph K. Njoroge
Min 1/29/2/2020: Preliminaries
The meeting was called to order by the Chairman at 0900Hrs upon constitution of quorum
as per the Sacco by-laws. A confirmation of the AGM Notice of at least 14 days was done.
Tabby Masau led the opening prayer.
Min 2/29/2/2020: Confirmation of the Agenda
The secretary read the agenda of the meeting as below:
1. Confirmation of the 2019 Annual General Meeting Minutes and matters arising
2. Report from the Chairman
3. Remarks from the Chief Guest
4. Report from the supervisory committee
5. Presentation of the 2019 Audited Financial Statements
6. Presentation of the year 2020-2021 Budget
7. Appointment of Auditors
10. Any Other Business (A.O.B)
The agenda was adopted as proposed by Michael Borino and seconded by Chris Oduor.
Minutes of the Safaricom Sacco 19th Annual General Meeting Held on Saturday 29th February 2020 At All Africa Conference of Churches
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Min 3/29/2/2020 Review and adoption of the 2019 AGM minutes
The Honorary Secretary Alex Okoth reaffirmed to the members that the minutes were circulated
prior to the AGM to enable the members read through. There being no amendments, the
minutes were adopted as recorded and proposed by Michael Borino and seconded by Chris
Oduor.
Min 4/29/2/2020 Matters arising from previous minutes
Having no matters arising from the previous meeting’s minutes, the Hon. Secretary –Alex Okoth
- acknowledged the members present by the common bonds they represented as well as
those not represented by any common bond.
Min 5/29/2/2020 Chairman’s Report
The Chairman - Paul Msava welcomed the members and guests to the Annual General
Meeting (AGM). His remarks had the following highlights;
- The Sacco membership growth reduced by -6% attributed to cleaning the membership
database to get rid of dormant members and retain only quality members.
- Apart from the Core Capital, which registered a -10% growth, all other parameters
reported a significant growth. The significant drop was due to the shares drive refund in
March 2019, that the Sacco implemented after the members in FY2018 Annual General
Meeting passed a resolution.
- He informed members that the Sacco was keen in observing the data protection policy
to protect members’ information.
- The People pillar and customer service was to be part of his key agenda in 2020.
- He mentioned that there were several fraud incidences that were reported in the year
2019 some involving senior managers who were dealt with decisively.
- He reassured members that the recruitment process for Senior Managers was thorough
and was conducted by Board members and involved thorough background checks.
- In 2019, SASRA targets on Institutional Capital parameters were successfully met.
- On PAR, the Chairman noted that there is need to strengthen our securities and informed
members of the frustration that is currently being experienced when recovering from
guarantors.
Motion to adopt the Chairman’s report was proposed by Josiah Mache and seconded by
Samuel Karanu.
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Dr.Harry Osore: Sought clarification why there
seemed to be no progress with
The Kenya Mortgage Refinance
Corporation (KMRC) – a registered
engagement and how the project
would benefit Safaricom Sacco
was the low-income earners.
housing agenda for members
earning Kes.150,000 and below.
shares and among the pilot team
- KMRC was setting the framework
in 2019, a process that was to be
implemented.
preparedness on the looming
was spreading fast in China and its
impact on the Sacco financials.
The impact of COVID-19 pandemic
was to be measured and if
the economy were impacted
losses and consequently increased
strong financial base to weather
the storm.
of money that was defrauded
and if the Sacco was seeking
compensation through fidelity
be the compensation.
pay 3M by the Insurance a matter
that was appealed to the insurer.
Charles Karanja He raised a concern on the fact
that banks were giving mortgage
at a lower interest rate compared
to the Sacco rate of 13% and felt
the product need to be revised.
The Sacco would be able to
get funds from KMRC at a lower
interest rate and eventually review
the mortgage rates to about 8%.
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turnover rate during the preceding
year
technology and measure its
impact to operational efficiency.
equipped the Sacco was to handle
KMRC mortgage.
informed members that the
member of KMRC, which gave the
SACCO confidence being part of
the decision-making process.
who were removed from the
membership register during the
outstanding loans
shares, deposits or loans
app that it was not user friendly and
had no benefit to members due to
hidden charges. He also needed
an explanation why the system
was implemented before proper
initially the Sacco had a system
from a third party that was hacked
and limited accessibility from Mon
to Friday 8:00am to 5:00pm. Initial
go live plan for the new system
was August 2019 but the project
missed on some timelines and the
actual go live was on 1st Nov 2019.
The system was implemented with
minimum features and gradually
built on additional features.
Communication to members on
applicable charges were made
were implemented.
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Min 6/29/2/2020: Acknowledgement of and Brief Remarks by the Invited Guests
Cooperative Bank - Benson Kilonzi – representing the Director, Vincent Marangu.
- He applauded the Sacco for being one of the strongest in the country and congratulated
the Board for the direction they had taken to ensure Institutional Capital was met.
- On Portfolio at Risk (PAR), he noted that since Sacco’s used the guarantorship model
while lending, guarantors should follow up on the defaulters to ensure they pay up
their loans. He stated that 7% PAR was good but could be improved, since the market
standard was 10%.
- He encouraged the members to save more and for the Sacco to embrace mobile-
based products.
- He advised the Sacco to consider reviewing its Mortgage interest rate to avoid
competition from the banks as the latter offers lower rates.
Cyrus Musa representing the Government:
- He commended the Sacco for being financially & cash flow stable since some Sacco’s
queue member loans due to inadequate liquidity ratios.
Arnold Munene – Senior Regional Manager - Kenya Union of Savings & Credit Cooperative (KUSCCO)
- He applauded the Sacco for maintaining a steady growth over the years and for having
two (2) Safaricom Sacco Board Members as KUSCCO delegates- Alex Okoth and Connie
Khayundi.
- He explained that KUSCCO was a defender of Sacco’s and had continued to block any
intention by the Government to interfere with their operations i.e. through increasing
Withholding Tax for Rebates & Dividends from 10% to 5%.
- He informed the members that Safaricom Sacco had collaborated with KUSCCO to offer
a competitive last expense/ benevolent cover to the members.
- He encouraged members to take loans since returns on investment would be increased
if the society lent funds rather than keeping them at the bank.
Margret Kamau Westlands Sub-county Cooperative Officer
- She noted that the Sacco had shown significant growth and advised members to borrow
and invest wisely.
- She informed members that there was a policy being developed to align county functions
and the National Government i.e. “The National Development Cooperative Policy”
Chief Guest David Obonyo representing the Permanent Secretary for Cooperatives- Ali Noor
- He applauded members for turning out in big numbers for the AGM, which gave them
an avenue to review the past performance and plan for the coming year.
- He noted that Safaricom Sacco is one of the largest Sacco’s in Kenya with a promising
future since majority of its members were young.
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- The National Government had recognised the Co-operative movement as a key economic driver with 32% of the GDP being contributed by Sacco’s.
- He added that the highest saver in Nairobi had saved Kes.80M and encouraged members to embrace a savings culture without fear since Sacco’s were regulated and governed just like banks.
- He commended Safaricom Sacco for being among the 11 Sacco’s that the Government was working with to establish KMRC.
- He urged the board to have products that were tailored towards financing sectors in line with the Government big (4) four agenda.
- He applauded the Sacco for the system changeover, which had improved service delivery to members but cautioned the society to be vigilant on Cybercrime and strengthen the system security to safeguard member’s savings.
He highlighted below new developments in the governance of Co-operative movements.
- That those in Sacco leadership, both Board and Management, were now required to fill the wealth declaration form and return to SASRA. Those who did not file risk separation from their positions.
- The Co-operative Development policy was being developed and the Sacco Society investigation Unit would be domiciled in EACC.
- A professional body had been introduced requiring employees to subscribe.
- That any Sacco with over Kes.100M deposits would be regulated by SASRA.
Supervisory Committee Report
Pamela Nyakoah – The Secretary, Supervisory Committee, presented the report. She gave
apologies for the Chairman, Patrick Nduati in absentia.
The Committee report highlighted below areas;
- Internal controls needing improvement including Bank reconciliation and payment processes.
- On the 2018 AGM processes, the Committee reported that the resolutions were implemented
as had been passed.
- Membership was reviewed after noting high level of withdrawals and dormancy and there
was a recommendation to reactivate dormant accounts.
- The committee benchmarked with other Sacco’s on financial performance and noted that
despite the strong liquidity ratios, the Sacco was lagging on Institutional Capital and PAR. Both
needs improvement.
- The Governance audit covered more on human resources, which revealed a high attrition in
the preceding year.
- The Committee audited project CIRI implementation process, which included data migration,
data integrity, financial reports, system functionality and performance.
The Supervisory report was proposed by Janeth Cheum and seconded by John Orutwa
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MEMBER REACTION RESPONSE
well addressed and members who
had not attained the minimum
requirement of 40,000 were to be
informed to do so.
Institutional Capital, should not
supervisory committee report
of the resolutions, members were
required to pay their share capital in
one year as opposed to the previous
two years.Aditionally, one would
access loans.
highlighted the system as
functionalities not meeting
ahead to give assurance that the
system will solve operational issues.
He wanted to know if the Board
tested the system before going live.
The treasurer responded that the
previous system was in operation
for 18 years and had gone through
several changes to stabilise and
make if fit for operations. He gave
assurance that the new system will
stabilise over time.
system was to go live in September,
but the delay until end of October
2019 was to allow thorough testing.
The target to closure was 90 days
after go-live but there had been an
overrun as the developer continued
to work on stabilising the system.
Bernard Okoth Raised a concern on internal controls
and why bank reconciliations were not
done.
Bank reconciliation was pointed
and system audits were to be done
frequently. The Credit and finance
policies were also to be reviewed.
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to the Supervisory report, the
Business development Committee
fully implemented. He sought to
know which committee had the
true status.
The Secretary Supervisory Committee, made it clear that the Supervisory
Committee raised gaps to the Board
which were worked on. The Board
reported on the current status and
some issues could be work in progress.
The Chairman, stated that the
Supervisory report was as at 30th Dec
2019 and the Business Development
Committee report was for the
current status.
Supervisory reports were periodic
Committee did audit continuously
land issue was not mentioned.
He also stated that the issue of poor
customer service could call for
additional staff or rolling out a CRM.
-The treasurer informed the members
that the owner passed away and that
the Sacco was pursuing the letter of
administration and there was good
progress.
land issue
channels the Sacco had provided
in accessing Sacco services. He
reassured members on the security
of the current USSD code since it is
owned by the Sacco as compared
to the previous one that was owned
by a third party.
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Min 8/29/02/2020: Treasurer’s and Auditor’s Report
The Treasurer asked for member’s consensus to have him present in tandem the Treasurers report,
Audited books of account and 2020/2021 budget, Q&A session to be taken thereafter.
Treasurers report: Proposer: Barbara Nyambura
Seconder: Safia Isak
Seconder: Elizabeth Nderitu
Seconder: Yusto Omondi
- The Treasurer’s report highlighted that the Sacco stopped the sale of land and had to look for
other avenues to generate revenue. The mortgage product introduced in 2019 didn’t pick up
well. More focus was now on money markets, long-term and short-term fixed deposits and all
other monies put on call deposits.
- PAR and loan provisioning affected the Sacco’s income and pleaded with members to help
pursue defaulters to pay their loans.
- SASRA directed the Sacco in 2018 to grow Institutional Capital at 1.5% to 2.0% annually until
they achieve the expected 8%. The Sacco was at 4.7% in 2019.
- The Treasurer emphasised on the need for members to take loans as this would increase the
return on investment, he alluded that majority of members did not have loans.
to the Supervisory report, the
Business development Committee
fully implemented. He sought to
know which committee had the
true status.
The Secretary Supervisory Committee, made it clear that the Supervisory
Committee raised gaps to the Board
which were worked on. The Board
reported on the current status and
some issues could be work in progress.
The Chairman, stated that the
Supervisory report was as at 30th Dec
2019 and the Business Development
Committee report was for the
current status.
Supervisory reports were periodic
Committee did audit continuously
land issue was not mentioned.
He also stated that the issue of poor
customer service could call for
additional staff or rolling out a CRM.
-The treasurer informed the members
that the owner passed away and that
the Sacco was pursuing the letter of
administration and there was good
progress.
land issue
channels the Sacco had provided
in accessing Sacco services. He
reassured members on the security
of the current USSD code since it is
owned by the Sacco as compared
to the previous one that was owned
by a third party.
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Sacco’s were paying better
returns to their members’
thought that it was too optimistic
- Audit fees had grown significantly
from the previous budget
The Treasurer observed that
appearing as if they were better
than ours, there was need to know
their financial strength and he
reiterated the need to meet the
Institutional Capital ratios.
patronised the Sacco products.
increase in audit fees was due to
forensic investigations that were
needed more controls
for the good work they continued to do
and encouraged members to nurture the
Sacco and show patience as some of the
processes were being changed.
activated and followed up so that they
do not get back to dormancy.
He relayed a message of gratitude from
Malindi members on the new system
since it had given them solutions.
On compliance, he urged members
to support the Board to comply with all
regulations.
appreciated
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felt ex staff who were defaulters from
the common bonds should be followed
through HR by adding an exit clause for
the Sacco to be informed when the staff
showed intention to quit employment.
On the mortgage product she proposed
partnership with construction companies.
- why tax expenses proposed were
Kes.4.5M in 2019 with actuals of Kes.7.3M
and 2020 the proposed budget was
Kes.2.8M.
- Increased debt collectors
to 10 companies.
even after exiting common
re-designed to align it to market
expectations
call deposits
Isaac Oduor Sought to know the impact on PAR if all
defaulters were to pay their loans. He
noted that the Treasurer should not sound
frustrated but should guide on how the
money would be collected.
between members, Board and
Kes.633,805,790 instead of Kes.9,135,150
reported that some items that were
removed especially the office
update accordingly.
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1. Pay dividends on share capital at 12%.
Proposer – Collate Ongwen
Seconder – Elizabeth Mudogo
Proposer – Joshua Kilel
Seconder – Mackrine Abukah
3. Share capital of 40,000Ksh to be attained with 12 months by new members and any
member applying for a loan must be fully paid up.
Proposer – Yusto Omondi
Seconder – Rosemary Chege
Proposer – Malachi Onyango
Seconder – Maria Siranga
Proposer – Mackrine Abuka
Seconder – Richard Ogama
6. Payment of Honorarium of Kes. 2.2 M to the Board and staff bonus of Kes. 4.1M.
Proposer – Rosemary Chege
Seconder – Willan Gitau Njenga
7. Benevolent fund be insured with KUSCCO Mutual Insurance (KUSCCO) - It was guided
that a survey be done to establish the opinion of members as well as the Sacco to
exhaustively compare with other competitor insurers
Proposer – Eunice Karanja
Seconder – Peres Opiyo
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Min 10/29/2/2020: Staff of the year
The staff of the year was Felix Ngugi – Teller in the Finance department.
Min 11/29/2/2020: Elections
The Nomination’s Committee Chairman - Kennedy Auka - pointed out that for a member to be
eligible for election, they must comply with Chapter 6 of the Constitution of Kenya,
have a minimum Share capital of Kes.40,000 and minimum deposits of Kes.1M. The skills gap in
the Board were as follows;
Board of Directors
- Human resource skills at an expert level to assist in reducing the staff turnover.
- Accountant to meet the minimum requirement of at least two accountants.
- Gender (lady) in line with the constitution to have 1/3 of either gender.
Supervisory - Accountant in line with the act where at least one member of the committee should
understand accounts.
Category Skills No of applicants Cleared
Board Lady 1/3 Rule Gender adherence Seven Four
Accountant Five Three Human Resource Three One
Supervisory Accountant Two One
A member raised a concern that the shortlisting process was not fare where some members
were elected unopposed and qualified candidates were left out. The Nomination’s Chairman
however clarified that the process was free and fair, and that the committee strictly sought to
address skills gap in the Board.
The election was conducted electronically; Catherine Wambua from the State department of
co-operatives oversaw the process.
Online voting was proposed by Felix Okuku and Seconded by: Peter Mbuya
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Board
Supervisory
Supervisory:
Proposer – Richard Ogama
Seconder – Erick Owuor
Accountant category:
- Fredrick Kiio – he was not present due to a bereavement - Leornard Okoth - Bernadette Mutune
Gender category:
The CEO took the members through the online voting process
Voting results summary:
Members who attended – 735
Members who voted – 312
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Leornard Okoth 169
Bernadette Mutune 113
Fred Kiio 29
Min 13/29/02/2020: AOB
There being was no Any Other Business that had been received as stipulated by the by-laws on
AGM. Director Peter Chege gave vote of thanks
Collate Ongwen offered the closing prayer at 1635hrs.
Signed:
Secretary:
Confirmed
Chairman: Date: 27.02.2021
Member: Date: 27.02.2021
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Ladies and Gentlemen. A very good morning to all
of you, I am delighted to welcome you all on behalf
of the Board of Directors to the 20th Annual General
Meeting of Safaricom Sacco Limited for the Financial
Year 2020, being held virtually today. We normally
meet in a different setting but COVID -19 pandemic
has disrupted that entire conventional ambience and
we are now exposed to a new normal. It is wonderful
to see many of you joining in from different parts of the
country and overseas. I gratefully acknowledge your
continued trust and support extended to the Sacco
that have bolstered us to progress ahead over the
years.
The year that was
COVID-19 pandemic has presented the biggest challenge that the Kenyan economy had to
deal with in recent times. Much like everywhere else around the world, our people, business and
communities have faced a difficult period with many worried about their lives and livelihoods.
Our focus on becoming an increasingly agile, resilient and future-ready Sacco has helped us
overcome changing business challenges in the globally disruptive environment. We are particularly
pleased with how we were able to leverage on our digital prowess to offer solutions that helped in
supporting our customers at this time. The significant investments we made in our digital capabilities
over the past several years are allowing us to reach people on their phones and in their homes
quickly and easily.
The after COVID-19 world will see human experiences becoming more contactless yet even more
connected. This is exactly where our competitive advantage will come to the fore: technology
will determine who survives and thrives as much as tech for good will distinguish who makes a
difference. In this regard, the Sacco will remain innovative and responsive to the needs of members.
Financial performance
We are reporting a much impressive performance for the last financial year despite the impacts
STATEMENT BY THE CHAIRMAN, SAFARICOM SACCO LTD ON THE 20TH ANNUAL GENERAL MEETING HELD VIRTUALY ON 27TH FEBRUARY 2021
PAUL MSAVA- CHAIRMAN
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of the pandemic. Looking at some of the key performance highlights for the year, the total assets
increased by 12% to Kshs. 7.4 Billion compared to Kshs. 6.7 Billion in 2019. Member deposits increased
to Kshs. 6 Billion from Kshs. 5.5 Billion in the previous year, a growth of 9%. Overall, it was a satisfactory
year with revenues at Kshs. 778 .9 Million and profit after tax at Kshs. 237.4 Million.
Compliance with SASRA regulations, As I highlighted last year, the Sacco is in the journey of attaining full compliance with the Capital
adequacy ratios as prescribed by the regulator, SASRA. The Board is committed to meeting the
deadline of 31st December 2021 as agreed with SASRA. In this regard, the Sacco attained an
Institutional Capital of 6% as at the end of FY 2020 against the minimum of 8%. We are confident that
the difference of 2% will be attained in the FY 2021.
KMRC Mortgage Loans Am glad to inform you that the Kenya Mortgage Refinance Company is operational after obtaining
a license from Central Bank of Kenya in September 2020. The mandate of the company is to provide
long-term funds to primary mortgage lenders (Banks, Microfinance Banks & Saccos) in order to increase
the availability and affordability of home loans to Kenyans. As a member of KMRC, Safaricom Sacco
is eligible for the long terms loans at a subsidized rate of 5 % p.a. ‘
During the year, the Sacco got an approval from SASRA to offer affordable mortgage loans. Members
can now enjoy loans at a rate of 9% for a tenure of 25 years for purchase of ready houses and 8% for
construction of own houses.
We call upon all members to take advantage of this opportunity and make dreams of owning their
homes come true.
Corporate governance
One of the critical responsibilities of Sacco’s is to safeguard customers’ deposits and meet stakeholder’s
expectations. This can only be through a rigorous and disciplined governance structure, which Safaricom
Sacco religiously subscribes to. Our governance standards are cognizant of the best practices and
continue to promote strong culture amongst the staff and members. Governed by the Board Charter
that sets out a maximum term on the Board, and the steps to ensure a seamless succession, changes
to the membership have been seamless and timely. The Board through the nominations committee
ensures that the Sacco leadership attracts a good mix of skills and competences by advertising and
interviewing candidates to Board positions.
Our People
Our talented workforce is our most valuable assets and reflects our strength resilience and future
readiness. The focus last year was on the people pillar, on boarding the right talent, building
capability. nurturing an innovation-centric work environment and creating an inclusive empowering
and balanced work environment. During the year, the Board reviewed the organogram and ensured
optimum staffing levels by filling vacancies in the credit, ICT and finance departments. During the
year under review, the Sacco recorded the lowest staff turnover in the last seven years. This shows
that the staff have confidence in the Sacco and are well motivated.
26
The Board is committed to developing an elaborate best in-class employee value proposition to ensure
our staff successfully deliver on the Sacco strategy. We shall continually invest on human resource
development focusing on training, staff wellness, staff recognition, competitive remuneration and
career growth.
Our Focus
Looking into the future, we foresee strong growth in an improved macroeconomic environment,
especially the financial sector in Kenya. Our focus for FY2021 will be;
1. Drive innovation through implementation of technology driven products and services – we
shall continue delivering products through our digital platforms.
2. Compliance with regulatory requirements – The board will ensure full compliance with SASRA
and other regulatory requirements including Anti money laundering laws.
3. Loan delinquency /PAR - the Sacco has been reporting a portfolio at risk (PAR) that is beyond
the industry standards of 5%. During the year, our focus will be towards achieving a PAR of
below 5%. I call upon all members to pay their loan obligations promptly.
4. Improved Customer Experience – Our customers have a right to be served exceptionally well.
Through our digital transformation, we shall focus on Do – It –Yourself (DIY) solutions to ensure
prompt response to their queries.
Conclusion
On behalf of the Board of Directors, I would like to recognise our customers, business partners,
stakeholders as well as the government for your continued support. We also wish to thank our
management and employees for their continued agility and resilience through the crisis. They have
demonstrated deep commitment to this business, and I have no doubt that, with their continued
efforts, we will emerge stronger. I would also like to sincerely thank my fellow Board members for
their counsel, support and dedication throughout the year and for delivering a strong Corporate
Governance Environment.
In a special way, I would like to unreservedly thank Ms. Connie Khayundi who is retiring from the Board,
having served for six years - for her tremendous leadership in the Sacco. She has served in various
capacities in Credit, BDC and Finance & Administration committees and as the Vice chairperson in
the last one year. I wish her all the best in her future endeavours.
May God Bless you all, Long Live Safaricom Sacco.
Paul Msava Chairman
27
Dear Members,
I welcome you to our 20th AGM being held in the “New
Normal”.2020 was yet another remarkable year with the
Sacco registering impressive results in the midst of COVID-19
pandemic. The business remained resilient despite the
challenging economic conditions witnessed in the various
markets we operate in and indeed the wider global
economy.
COVID-19 pandemic has upended nearly every aspect of
life, from the personal, - how people live and work- to the
professional, - how companies interact with their customers,
and how customers choose and purchase products
and services. The significant changes in the operating
environment caused by COVID-19 are forcing businesses
across all sectors into a digital reorientation. Opportunely,
successful implementation of Project CIRI amplified the
need to focus even more on service delivery with Channels
radically shifting to accommodate new needs or work
around new constraints.
During the year, we were able to meet key milestones in our digitization journey by successfully enabling iOS users
access SafCIRI App, therefore enjoying all the services. Project CIRI as the touchstone, we were able to direct all our
loan applications online on iConnect with guarantor approvals on SafCIRI. Member registration has been digitized
with one being able to join the Sacco without having to fill papers.
Customer Service being one of our key focus, our members have been able to access services through our Customer
Relations platform on iConnect as well as tawk platform on our website. We have also widened our reach by having
additional customer care lines manned by staff from various departments. We remain committed to customer
excellence and endeavour to close all gaps that lead to poor customer experience.
The success we have published in this report was made possible through our dedicated staff of varying attributes
and professions. The commitment to nurture best in class staff with up to date training continues with an annual
growth in the number and variety of core and non-core training courses offered to our staff. Among the courses and
trainings conducted in 2020 were awareness courses on IT & cyber security, health and safety, anti-money laundering,
customer service, all of which remain pertinent topics necessary for the individual at work and away from work.
This year, as we celebrate our 20th anniversary, our focus is to leverage digital technologies to adapt and innovate,
trying out novel business models, developing new business processes and practices, and redefining models for
collaboration and teamwork.
Conclusion
I would like to thank the Board for their support, staff for their diligence and members for their loyalty.
I would also like to thank all stakeholders and other service providers for their support throughout the year.
I wish you a prosperous and productive year in 2021.
Joseph K. Njoroge Chief Executive Officer
STATEMENT BY THE CHIEF EXECUTIVE OFFICER, SAFARICOM SACCO LTD ON THE 20TH ANNUAL GENERAL MEETING HELD VIRTUALY ON 27TH FEBRUARY 2021
JOSEPH K. NJOROGE - CEO
28
presenting to you our FY 2020 financial results; a
report that is the result of a year of mixed fortunes
for us as a Sacco but one that reflects the resilience
of our members and an outcome that exceeds
expectations given the tough year we had.
In order to set the context of our business
environment, it is important to first look at the
overall state of Kenya’s economic outlook before
looking at where we stand and the future going
forward.
2020 was expected to be a fantastic and great
year for the Sacco. The Board of Directors started
the year with cautious optimism but soon after the AGM, COVID - 19 pandemic impacts started being
felt in the country. All major sectors of the economy were affected and though some measures were
taken to cushion Kenyans, impact was felt and continues at the moment. The World Bank projected
deceleration of Kenyan real GDP from an average of 5.7% in previous 5 years to -1.5% in 2020 and
possibly a contraction if the pandemic was not controlled.
Our membership is drawn from Kenyans who have had a difficult year in 2020 and have been
negatively impacted by the harsh economic times. As we are in the credit business, the result of this
has been heightened credit risk and accompanying negative impact on performance of our loan
portfolio.
That notwithstanding, the Board of Directors put in measures to mitigate this risk and minimize the
effect on our financial statements.
Though it is expected that there will be a rebound in 2021 where we will have positive growth, we
start 2021 poised that as the economy is opened up and matters hasten forward, we will see great
improvement. The strong desire to ensure the Sacco prospers will be carried over from 2020 into
2021; we intend to dedicate even more effort and energy in ensuring risks are mitigated and a solid
foundation is set for the future of our Sacco.
GEOFFREY GEKONGE - TREASURER
REPORT BY THE TREASURER ON THE 20TH ANNUAL GENERAL MEETING HELD VIRTUALLY ON 27TH FEBRUARY 2021.
29
Looking back on our financial performance in 2020
2020 financial performance can be split into two parts. A challenging year that saw us fall short on
certain fronts but also saw us make positive strides too.
Firstly, - the positives, our overall capital position is stronger in 2020 when compared to 2019. We have
further increased our institutional capital reserves by 100 bp in 2020 (FY2020: 6% v FY2019:5%). Though
still short of our statutory minimum of 8%, we have increased our stability as a Sacco. In addition,
our core capital to total assets and core capital to total deposits ratios are up 200bp and 300bp
compared to 2019.
We managed expenses better in 2020, Reducing expenses to revenue ratio by 100bp. considering
the drop in revenue and fixed nature of some of our expenses, this was a major driver of our success
in 2020.
Interest to members deposits/total revenue ratio is up 700bp. We have distributed more revenue to
members in 2020 than in 2019.
On rebates, despite a tough year, we have managed to maintain our rebates (FY 2020: 7.5% v FY2019:
7.5%). In light of the challenges we faced as an organization in the current business environment and
the need to also meet statutory compliance, this is a commendable achievement.
With regard to the downsides of 2020,We fell short of the budget overally- mainly driven by a
slowdown in loan disbursements as covid 19 pandemic impacts were felt across board. Though overall
disbursement picked up later in the year, the opportunity to earn from early disbursement was lost.
A downturn in economy also meant that our credit risk was marginal and therefore saw our NPL ratio
change from 7.9% to 7.7%.
In addition, as a Sacco, we are currently holding excess liquidity in form of cash and cash equivalents
which though currently invested and held in bank accounts, is an asset that can be better utilized by
disbursing this in form of loans to members. We encourage members to patronize our vibrant products
in order to maximize the full potential of the assets we hold.
The journey to full statutory compliance
As a regulated entity, we have minimum statutory ratios which we are expected to comply with.
Though we have consistently met our Core capital/Total assets and Core capital/Total deposits ratios
over the last few years, our Institutional capital/Total assets ratio has consistently been below the
minimum ratio.
Over the last few years, a conscious effort has gone into moving the Sacco into full compliance; I am
pleased to announce that despite a challenging year, in FY2020 we managed to move closer to full
compliance having progressed our Institutional Capital ratio from 5% (FY2019) to 6% (FY2020).
30
It is our expectation that we will be fully compliant and achieve an institutional capital ratio well
above the 8% in 2021.
The financial stability of the Sacco depends on having a strong capital base which has to grow in line
with the growth in assets and overall growth of the business. Achievement of this capital adequacy
ratios will ensure that the Sacco is well founded to weather any adverse events in the future.
I appreciate the support that members have given towards achievement of this target.
Rebates, Dividends Staff Bonuses and Honoraria
As a proposal to members for approval, the following will be presented to you for consideration:
Rebates: A rebate of 7.5% on weighted deposits is proposed by the Board of Directors to be distributed
to members
Dividends: On the share capital contributed by members, it is proposed that a dividend of 12% be
distributed
Staff Bonus FY 2020: The Board of Directors proposes members approve a bonus of 5.2m KES to be
distributed to our Sacco staff based on individual performance in FY 2020.
Honoraria: As a token of appreciation to the Board of Directors and Supervisory Committee, a
proposal is submitted for approval of KES 2.9m KES for distribution amongst the Board of Directors and
Supervisory Committee
2016 0%
2017 2018 2019 2020
IC ratio Minimum ratio
31
Looking forward to 2021 and beyond
As the COVID-19 pandemic is still here with us, another challenging 2021 year is ahead of us as a
Sacco. However, it is a firm belief that with increased patronage of our Sacco products from the
members, we can definitely make progress and achieve positive growth year-on-year.
Currently we have only ~50% of our members borrowing from the Sacco. This figure we expect
to grow progressively as we offer more robust products that meet our members’ needs. New
products have been offered in 2020 and there is more to come. All that I can do is urge the
members to make the Sacco their preferred choice for credit facilities. The success of the Sacco
entirely depends on us as 13,146 members; we are the owners and customers of the business. For
2021, we project to grow our interest income revenues by ~8% to 750mKES.
In order to ensure long term sustainability, growth in revenue and improved expense management,
we will ensure that we build a stable base for the Sacco going forward.
Our collective ambition is getting the Sacco to 1Bn KES in top line revenue. The commitment from
myself as the Treasurer and the Board is working towards achieving this milestone. It really is within
our reach. Already we have broken the 6Bn KES mark on loan book value; growing the loan book
plays an integral part in ensuring we achieve revenues in excess of 1BnKES.
I am confident that having navigated through the challenges we faced as an organization in
2020, we can look forward to a brighter future.
The Sacco is in good hands that are steering the organization forward.
Thank you.
Geoffrey Gekonge Treasurer
32
MANDATE
The Nominations Committee was set up by the Safaricom Sacco by-law number 46. Its mandate is
expounded in the corporate governance charter of Board. The main objective of the Nominations
Committee is to ensure that there is a formal and transparent procedure in the appointment of Directors
of the Board. It then follows that every year the Nominations Committee reviews the structure, size and
composition of the Board and its Committees to ensure that there is an appropriate balance of skills,
expertise, knowledge and independence, bearing in mind the leadership needs of the Sacco and
with a view to ensure continued ability of the Society to compete effectively in the market place. The
Committee takes applicants through a selection process before it presents a list of finalist candidates
to the Board. The Board will then make their own formal approval independently before the selected
candidates are presented to the members for final appointment through an election process.
COMPOSITION
During the year ended 31 December 2020 the following members served in the Nominations
Committee;
2. Mrs. Phyllis Mutua (Member) ICPAK (Retired Oct 2020)
3. Mr. Hesbon Kiura (Member) State Department for Co-operatives
4. Ms. Theresa Mruttu (Secretary) Safaricom Limited (Legal Department)
5. FCPA Samuel Okello (Vice Chairman) ICPAK (w.e.f Oct 2020)
6. Chief Executive Officer Secretariat Safaricom Sacco Limited
7. Internal Auditor Secretariat Safaricom Sacco Limited
VACANCIES IN BOARD
The Nominations Committee analyzed and identified the skill gaps in the current board leadership.
Consequently, Sacco members were invited to apply for various board positions, based on the skill
gaps identified by the Nomination Committee. There were four categories, three in the board and one
in Supervisory Committee setting pace for the nomination of candidates exercise. These categories
were:
Board of Directors
1. ICT /Technical skills at the expert level to assist in completing the digitization agenda.
2. Customer Care – to address the customer experience that is still below the desired levels.
3. Gender (Lady) In line with our constitution that requires minimum representation of 1/3 by
either gender
33
Supervisory
1. Gender (Lady) In line with our constitution that requires minimum representation of 1/3 by
either gender
The Nomination of candidates for Elections in the 2021 AGM was conducted as per the nomination
policy and guideline, where vacancy advertisement was sent to general membership on 26th
October 2020 with closing of receiving application set as 20th November 2020. By close of the period,
the committee had received 16 applications, which were then assessed in line with the minimum
qualification set by the Sacco nominations policy and guidelines. Thereafter, the candidates were
invited for interviews and at the end of the process; the Nominations Committee cleared 13 nominees,
that we are presenting to you today as follows;
Summary Of Applicants Skills And Requirement
Category Skills No of applicants Cleared
Board ICT/Technical 5 4 Customer Care 4 3 Gender 1/3 rule 4 3
Supervisory Gender 1/3 rule 3 3
The unsuccessful candidates were notified and no appeals were received by the Nominations
Committee.
ANNUAL BOARD EVALUATION
The Nominations Committee conducted the annual board evaluation and assisted the Supervisory
Committee to conduct its second annual performance evaluation. The reports have been shared
with both the Board and Supervisory Committee.
CONCLUSION
There is a clear and notable link between succession planning, strategy and culture of the company
in aiding effective implementation and sustainability, and in this respect the nomination committee
plays a key role in ensuring achievement of all these. The governance responsibilities are significant,
Board and Supervisory committee members must bring a high level of competency and experience
to the job. They must possess the capabilities to exercise leadership, teamwork/consensus-building,
and sound judgment on difficult and complex matters that come before them.
On this backdrop, we intend to enhance good governance by maintaining a diverse range of skills
and experiences that are able to provide constructive contribution to the management. Finally, we
are looking forward to maintaining a good working relationship with the Board and entire Sacco
fraternity.
34
BUSINESS DEVELOPMENT COMMITTEE ANNUAL REPORT
The mandate of the Business Development Committee is to review and oversee the development
and implementation of the Company’s growth strategies and make recommendations to the Board
with respect to investments in such growth strategies or acquisitions and divestitures for which the
Board’s approval is required.
COVID-19 defined a new normal, in not only how we interact, but also how we operate as Safaricom
Sacco. There was, therefore, a critical need to provide innovative services and increase accessibility,
while still maintaining the desired standard of Customer Service.
The successful implementation of Project CIRI amplified the need to focus even more on service
delivery with Channels radically shifting to accommodate new needs or work around new constraints.
The Committee has prioritized on innovation as the key to unlocking post crisis growth. Viability
motivated innovations has been the key focus to enable members’ access services during the
COVID-19 Pandemic. With this, we have seen several milestones in the year 2020 that have served
to improve the way Safaricom Sacco offers services to our valued members.
1. Loan Applications on iConnect
Safaricom Sacco’s core business is providing Saving and Credit facilities to its members. The
COVID-19 pandemic made it impossible for members to make physical applications. To bridge
this gap- ALL our loans (Short Term, Long Term, Loan Refinance and Vendor Loans) were availed
on iConnect to allow for easy application from remote locations.
2. Guarantor Approval on iConnect and SafCIRI
The need to therefore request and approve guarantors on loan applications saw our robust
system come in to provide a digital solution where members can request, modify, approve or
reject Guarantor applications online via SafCIRI or iConnect.
3. Customer Relations on iConnect
Customer Service being our key focus – we availed a Customer Relations Module on iConnect
as an additional platform where the Sacco resolves member concerns within a defined SLA of 1
hour.
CONNIE KHAYUNDI Chairperson
ELIZABETH MUDOGO Secretary
GEORGE HUNJA Member
35
4. SafCIRI on iOS
Diversity in devices that are used to access Mobile Banking Services saw us deliver SafCIRI on iOS.
5. HRMIS
Staff saw the successful rollout of the HRMIS System, which seeks to digitize internal operations.
6. Member Registration on iConnect
As per our Strategic Plan to recruit up to 20,000 active members, our registration process is now
online where members can self-register, providing a seamless and paperless member registration
solution.
7. Rebates and Dividends Distribution
Members will now be able to distribute/allocate interest earned on their deposits and shares on
both SafCIRI and iConnect increasing more DIY options leading to accessibility and accountability.
8. Banking Integrations (Pesalink and B2B)
For Safaricom Sacco to provide anywhere anytime banking there was a dire need to have a
solution that allows free movement of funds from your Sacco FOSA account to any IPSL listed
banks. With this, Pesalink integration was stabilized to ensure that virtual banking with Safaricom
Sacco was enhanced. On the upper hand - Direct Deposits to any of your Sacco accounts has
been made easier via COOP Bank B2B Integration.
We are looking to finalize integrations with three other banks, allowing remitting and receipting
to specific accounts seamless.
Security
It is critical that information security is upheld even as we strive to provide a range of solutions.
Collaborating with Safaricom PLC on infrastructure, applications and end point security solutions,
reported an improvement on how we monitored and reported potential threats with guidelines on
how best to tune our systems with security in mind. As a result, we saw no security threat pose a risk
to members’ funds and systems.
Member Recruitment, Education & Training
Recruitment
We have been running a campaign dubbed “Mlete Ndani” encouraging members to on board
their spouses, children, relatives, friends and colleagues. This is an effort to increase membership as
well as increase the cooperative principle of guarantorship by making guarantors easily accessible.
Induction and recruitment of new bonds was done successfully via virtual platforms.
Education & Training
Despite the new normal working conditions with the offices closed and staff operating virtually, we
were able to conduct numerous education programs with the various common bonds and regions-
36
educating and training more on Channels use, accessibility and product development.
Our product and partner profiles have been digitized for easy access with our website being
continuously updated to provide our members with continuous information needed.
Product Development
In view of the current pandemic, we were able to restructure most of our products to continue meeting
our members’ dynamic needs. These include:
1. Pamoja Loan:-New product introduced at the lowest interest in the market of 0.8 % payable
in 6 months.
2. Karibu Loan:-New product introduced for new members at 1%.
3. Kona Loan: - Limit exceeded to Ksh.50, 000 with a repayment rollover period of 2 months at
5%.
4. Consolidation Loan:-Offer period was extended for four months-with an extended payment
period of 72 months charged at 1%.
5. Development & Miradi Loan:-Merged into one-Development Loan-with a repayment period
of 72 months and a maximum loan limit of Ksh.30 Million.
6. Super Premium and Premium Loan:-Merged into one-Premium Loan- with a repayment
period of 48 months and a lower interest of 1%.
7. Emergency Loan:-Interest reduced to 1%.
8. Car Loan:-Maximum Loan Limit increased to Ksh.7 Million with 90% financing for new cars and
80 % financing for used cars.
9. Ustawi Mortgage Loan:- Maximum repayment period is 15 years(subject to retirement
age),with the maximum limit increasing to Ksh.20 Million.
10. Deposit Boosting:-5% charged on boosted amount.
11. Children’s account:-You can now use your child’s savings to guarantee your loan at no extra
cost.
Partnerships
1. Kuscco Mutual Assurance
We have outsourced our Benevolent Scheme/hand of comfort to Kuscco Mutual Assurance to insure
the fund against risk as well as provide double benefits to our members. The Sacco continues to
facilitate all operational requirements of the fund.
2. Kenya Mortgage Refinance Company(KMRC)
We have collaborated with KMRC to provide affordable housing to our members at an affordable
rate of 9% for completed mortgage houses and 8% for construction mortgage with a maximum loan
limit of Ksh.5 Million.
3. AMREF Flying Doctors.
We have partnered with Amref Flying Doctors to provide 24/7 emergency medical evacuation
services for our members and their families anywhere in Kenya and East Africa.
2020 created a myriad of challenges, but as defined in our Core Values and with Safaricom Sacco
37
being the best digital Sacco in Kenya, we have highly leveraged on technology to provide seamless
and innovative solutions. With these achievements as the foundation, we are looking at exceeding
our members’ expectations in all areas of service delivery in 2021.
As the committee driving innovations for Safaricom Sacco, we would like to encourage all members
to make use of services on SafCIRI available on Playstore and Appstore, and iConnect for all your
Sacco needs.
38
CREDIT COMMITTEE ANNUAL REPORT
The Credit Committee takes this opportunity to thank and congratulate the entire membership
for the continued patronization of our credit products and services in the year 2020. It’s with your
continued support that we delivered the set of good results amid a difficult business operating
environment due to Covid-19 pandemic. During the period, we saw an increase of 16% more
members who patronized products of the Sacco compared to 2019 against a backdrop a tough
year that attests to your commitment and trust to this great organization.
We continue to provide oversight of the Sacco policies and activities relating to the identification,
measurement, assessment, monitoring and management of the Sacco credit risk and lending
business. Our report covers loans disbursement within the year in comparison with the previous two
years and loan default management.
LOANS DISBURSED
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
January February March April May June July August September October November December
Monthly Loan Disbursement
Loans Disbursed (Kes) 2018 Loans Disbursed (Kes) 2019 Loans Disbursed (Kes) 2020
39
- Constant monitoring of the PAR movement on a daily basis.
- Addition of Human resource on the collection department that resulted to portfolio
segmentation and improved collection rate.
- Championed the review of collection strategies that involved demand notices and collection
through the Sacco lawyer.
- Thorough loan/business appraisal before disbursement.
- Strict monitoring of insider loans performance and thorough vetting of insider loans before
disbursement.
ACHIEVEMENTS
- During the period, we extended loans restructure offers and moratorium to members who
were directly impacted by the pandemic and further reviewed our loans interest rates with
the aim of making our products easily accessible to members.
- Introduction of digital loans approval that resulted to improved SLA on disbursement.
- Robust delinquency management strategies that resulted to improved PAR management
and increased collection rate despite the pandemic.
- Strict adherence to the credit policy.
CONCLUSION
The committee would like to take this opportunity to thank you, for giving us an opportunity to serve
you. We also continue to urge our dear members to honor their obligations by paying your deposits
and loans promptly to minimize on cases of default. We look forward to an enhanced partnership
in the year 2021.
0
500
1,000
1,500
2,000
2,500
January February March April May June July August September October November December
No. of Applications
2018 2019 2020
40
AUDIT AND RISK COMMITTEE REPORT
The Audit and Risk committee of the Safaricom Sacco Board is mandated to review the governance,
risk management and controls of the institution under the Sacco Societies Regulations, 2010. The
committee discharges this mandate through:
1. Oversighting preparation and presentation of financial statements.
2. Establishing requisite risk management policies and framework for identification,
measurement, monitoring, and control and reporting of risks.
3. Ensuring compliance with applicable laws and regulations as well as bylaws and internal
policies.
4. Oversighting the Internal Audit function to achieve strong internal controls that are
adequately designed and operated effectively to mitigate strategic and operational risks
of the Sacco.
5. Ensuring coordinated performance of the internal and external audit functions and oversee
the independence of External Auditors.
In the year 2020, the committee focused on delivering its mandate through continuous risk assessment
and advisory support to the Board to effectively respond to the challenges posed by COVID 19
pandemic. As part of support to the digitization program of the Sacco, the committee continued to
oversight and follow through the post-implementation stage of our core banking system to achieve
stronger controls and ensure closure of all outstanding issues.
The committee established and obtained Board approval for five new internal policies in 2020 to
further strengthen the Sacco’s governance and risk management. The policies were namely:
1. Anti-Money Laundering and Counter Finance of Terrorism Policy (AML/CFT policy).
2. Data Protection and Privacy policy
3. Environment and Social Policy and procedures
4. Disaster preparedness and Business Continuity Policy
5. Policy establishment Manual
This was in addition to leading the review of the existing Board Charter and Operating policies.
41
1. Risk Management and Compliance
The Enterprise Wide Risk Management (ERM) framework established in 2019 enabled better
management of risk and through proactive assessments and better coordination of risk
mitigation measures especially in relation to the COVID 19 pandemic impact on the Sacco.
Below are highlights of the committee responses to the key risks that Safaricom Sacco was exposed
to in the year 2020.
Risk Type Committee Response Outcome
1 Credit Risk Continuous monitoring of loans
issued and management of non
-performing Loans( NPLs).
2 Business Continuity Risk Established and approved
disaster preparedness and
Business Continuity policy
Seamless business continuity
staff in relation to Covid 19.
3 Data Privacy Risk Established and approved Data
protection and privacy policy
Adherence to the Data
into effect on 08 November 2019.
4 Cybersecurity Risk Review of reports from Safaricom PLC whom we have contracted to monitor the system 24/7.
Reduced losses from attacks & penetrations.
5
Established and Approved
of registering with Financial
Conducted Data verification
Accurate and valid data
vendor.
Risk Description / Nature Responses
42
Non-compliance with minimum institutional capital requirement.
Progressive steps set by board and management to achieve the regulatory ratios on institutional capital.
2 Reputation
Sacco revenue and member
member support service level
recurring system issues.
performing loans and
loan loss provisions
cases.
regularize the delinquent cases.
change and remote
infrastructure level security.
on the new platform with a plan for
comprehensive post implementation
Performance and Stability
Covid -19 pandemic
impact on business
inclusive financial service through
robust and competitive product
Management focus on cost control.
3. Internal and External Audit
The committee provided guidance and oversight to the Internal Audit Function resulting to
achievement of the 2020 Internal Audit plan. Appropriate corrective actions on identified audit
issues were obtained and reviewed by the committee and the Board. To further, strengthen the
control environment in the remote working arrangement, the committee instituted through the
Internal Audit Function a continuous review mechanism for high risk business operations resulting
in timely identification of improvement areas and resolution of required corrective actions.
43
The Committee provided effective oversight on the handover process between the former
external auditor (PKF) and the new auditor (RSM) who was appointed in the 2020 Annual
General Meeting.
4. Conclusion
The committee remains committed to offering valuable insights to the board on best practices of
managing risks within the Sacco to protect and safeguard member assets. The
Committee will continue to build capacity of the Internal Audit function through specialized
training and relevant digital tools to achieve adequate and proactive assurance for a better
control environment.
44
STATEMENT BY THE FINANCE AND ADMINISTRATION COMMITTEE
The Committee recognizes the fundamental role employees play as the drivers of strategy in the
Sacco thus they undertook a significant restructuring process on the people pillar. A job evaluation
exercise was conducted to create an equitable compensation structure and to align the Sacco’s
remuneration with the current market rates. A new organization structure has been implemented and
the staff placement done. New staff have also been recruited and more will be recruited as per the
Sacco’s needs.
COVID-19 DISRUPTIONS
The year 2020 began with the Covid-19 pandemic disruptions across the globe and the Government
of Kenya giving containment measures after the first case was reported in the country in March.
There was a major disruption in the workforce where staff could no longer go to the office or serve
and interact with members freely as was the norm. Considering the Sacco setup and its working
environment, the committee approved to have staff work from home. Staff facilitation arrangements
to work from home were put in place effective March 20th, 2020 which included home fiber monthly
subscription payments/data bundles, airtime and logistics during office visits. We are pleased to
announce that none of our staff have been diagnosed with the virus and service delivery has not
been disrupted in any way.
A support network has been maintained to ensure staff are psychologically, sociologically and
physically stable. This included mental awareness sessions with proficient counsellors. The Committee
provided ergonomic seats to all staff to ease the discomfort that might arise from the work from home
arrangement. A Covid fund has also been set aside with the insurer to cushion the team in case of
an emergency.
We give God all the glory for preserving the staff amid the pandemic and pray for a blessed year.
PAUL MSAVA Chairman
ALEX OKOTH Hon. Secretary
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Preamble
Our Chief Guest, Invited guests, Honorable members, Ladies and Gentlemen, It brings us great pleasure to present to you the Supervisory report of Safaricom Sacco Limited for the year ended 31st December 2020. We commend you members for the continued commitment to the mission and vision of the Sacco since the Society began its operations especially during the tumultuous year 2020. The Supervisory Committee also commends the Board for their commitment in directing the business of the Sacco during the year 2020 at the backdrop of the Covid 19 Pandemic.
Mandate
The Role of the Supervisory Committee as envisioned by the Co-operatives Society Act Rule 28 (3) is to verify all the transactions of the Society, write periodic reports of its findings to be tabled at Board meetings, submit its reports to the Commissioner and present its report to the annual general meeting of the Society. The goal is to ensure that the Board serves the interest of the members and safeguards the resources entrusted to them. In this Report we give informative emphasis to key audit issues and make recommendations for the mutual benefit of all stakeholders. Our main objective as we carry out our function is to help the Board reduce risks and ensure that their focus remains central on the interest of members.
PAMELA NYAKOAH Chairperson
BONIFACE MUTHOKA Secretary
JOSHUA KIMANI Member
SUPERVISORY COMMITTEE REPORT TO THE MEMBERS OF SAFARICOM SACCO ON 20TH ANNUAL GENERAL MEETING HELD VIRTUALLY ON 27TH FEBRUARY 2021
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AGM process was
evaluated, and the
committee also confirmed
The Committee confirmed with satisfaction that Rebates, Dividends, Staff Bonus and Honoraria were paid as per resolutions passed.
The committee also noted that the Board had implemented stringent measures in the registration process during the AGM and this then ensured that only bonafide members attended and voted in the elections.
The committee raised
Champions’ forums.
We recommended that clear matrix should be defined on timelines to respond to customer queries especially since the Sacco staff were working from home due to the Covid Pandemic. This should then be reviewed on a weekly basis to ensure compliance. In addition, the calls made to the designated numbers within the Sacco should reviewed to ensure that they are answered.
The Board indicated that this has now been defined especially for emails being sent to the Sacco staff and adherence will be monitored.
The Sacco has implemented the SAFCIRI system. The committee conducted a system review on the following areas
• User Access Management • Logical Access Controls • Business Continuity Measures • Incident Management and
Performance Monitoring
The committee noted that there was lack of segregation of duties for specific roles that had been assigned to users. There were also user access requests that had not been appropriately approved. We recommended that a user access matrix should be defined, signed off and the same implemented to ensure that all users are given the least privileges to the system as per their roles.
There was no approved password and account policy and as a result, there were some weak logical access controls that were noted. This should be documented to give guidance to the ICT staff on the setup of logical controls.
Though the Sacco’s Core Banking system had a disaster recovery site, comprehensive business continuity testing had not been done. This should be done to ensure resilience of the system in case of disasters.
There were delays in the resolution of incidents assigned to the vendor and committee highlighted that the resolution should adhere to the SLA agreements with the vendor.
Lastly, there was no automated performance monitoring of the servers supporting the Core Banking system for system health checks.
We recommended that a complete system audit should be done and all the gaps noted resolved.
We also recommended that the stability of the system should be reviewed to ensure members are able to access services digitally.
The board assured the committee that the issues noted would be resolved. They also indicated that an Information Systems Auditor would be on- boarded as the Sacco continued setting up its services digitally.
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The Governance audit covered People pillar and Board of Directors compliance
Though the Board had come up with measures to improve on the people pillar, we noted that there were some areas of improvement that needed to be addressed. The Board indicated that they would continuously review the HR organizational effectiveness of the people pillar guided by best practice and regulator.
For the Board governance, there was no procedure in place to ensure that succession planning was adequately setup incase a board member resigned from the board. We also recommended that all board members should sign conflict of interest forms to ensure transparency. The board indicated that this will be setup.
Though the board composition did not adhere to the 2/3 rule gender rule as a public institution, we noted that the nomination committee had come up with specific measures to ensure that this was adhered to progressively.
The board promised to have all the issues resolved this coming year as it focuses on People as one of its key strategic pillars.
In our Financial review, we covered the half-year performance and reviewed adherence to statutory obligations
We noted that whereas our Sacco had a strong liquidity, it was trailing other Saccos in some key ratio such as institutional capital and PAR.
We commended the board for setting up measures to ensure compliance to these obligations especially since we had increased our Institutional Capital compliance from 5% in 2019 to 6% in 2020.
We urge the board to prioritize statutory compliance and inform the members of the implication of non-compliance.
We also noted some tax compliance issues which the Board confirmed will be streamlined.
Our audit in credit management focused on loan issuance, recovery and CRB listing of defaulters.
We noted that there were loans that were not computing interests correctly due to a system issue. These were immediately highlighted to the management and the system issue resolved.
We also noted that there were loans that were not adhering to the banding matrix. The Board assured the committee that these would be corrected once the consolidation of loans had been completed
We reviewed the Sacco Membership after noticing the high rate of withdrawals and inactivity.
We noted with concern that we had lost a number of members due to the effects of the pandemic, poor customer service and lack of knowledge of the Sacco products.
We urged the board to increase its marketing and member education activities to ensure that the Sacco on-boards quality members who are well informed of all the Sacco products in place and also to put in place safeguards to retain members affected by the pandemic
Dormant members should be activated and follow ups done on the same.
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Proposed Revised Year
Other interest income 78,504,885 91,470,477 105,220,674 118,911,620 121,003,775
Total interest 771,728,223 892,748,567 854,507,719 1,148,292,069 981,650,788
Less: Interest Expenses 392,555,503 380,103,351 388,335,623 418,113,686 446,585,967
Net Interest income 379,172,720 512,645,216 466,172,095 730,178,383 535,064,821
Other operating income 7,219,019 10,441,357 8,185,571 13,573,765 10,373,407
7,219,019 10,441,357 8,185,571 13,573,765 10,373,407
Total Income 386,391,739 523,086,574 474,357,667 743,752,148 545,438,228
EXPENSES
Less Tax Expenses 10,795,846 2,845,382 15,783,101 17,834,904 16,640,214
Net operating surplus 179,312,636 203,470,996 121,111,058 360,016,228 157,588,156
Conclusion
There have been positive interactions between the Board and Supervisory Committee of the Society guided by the objective of upholding the mission of the SACCO and ultimately the interests of the members. The Supervisory Committee continues to support the Board in delivering the vision and mission of the Safaricom Sacco. We thank you all members for the mandate and trust you gave us to oversee the operations of the Safaricom Sacco. We commit to continue serving you through ensuring that the strategic plan is fully implemented, the complete setup of the new system and that the internal controls setup are adequate and adhered to.
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Proposed Revised Year
Other interest income 78,504,885 91,470,477 105,220,674 118,911,620 121,003,775
Total interest 771,728,223 892,748,567 854,507,719 1,148,292,069 981,650,788
Less: Interest Expenses 392,555,503 380,103,351 388,335,623 418,113,686 446,585,967
Net Interest income 379,172,720 512,645,216 466,172,095 730,178,383 535,064,821
Other operating income 7,219,019 10,441,357 8,185,571 13,573,765 10,373,407
7,219,019 10,441,357 8,185,571 13,573,765 10,373,407
Total Income 386,391,739 523,086,574 474,357,667 743,752,148 545,438,228
EXPENSES
Less Tax Expenses 10,795,846 2,845,382 15,783,101 17,834,904 16,640,214
Net operating surplus 179,312,636 203,470,996 121,111,058 360,016,228 157,588,156
BUDGET
50 1| SACCO Star Magazine
Education and Training (E&T) Tailor-made training to suit your SACCO needs at local and International levels.
IRNET Independent & Assured Clarity on your ICT Investment.
Research & Consultancy (R&C)
Providing access to sound management practices.
Central Finance Fund (CFF) Your SACCO’s ultimate lender of choice.
KUSCCO Mutual Assurance KMAL is a subsidiary of KUSCCO Limited, licensed by the Insurance Regulatory Authority (IRA) to operate as a life insurer in Kenya.
OUR PRODUCTS & SERVICES
KUSCCO Centre Kilimanjaro Avenue, Upper Hill, P. O. Box 28403 – 00200, Nairobi, Kenya. Tel: (020) 2730191, (020) 2722927 (020) 2721274 Cell: 0722 206 331, 0734 699 974 E-mail: [email protected] www.kuscco.com
Advocacy Ensuring an enabling legislative and policy environment for the growth of SACCOs.
KUSCCO Housing Co-operative Society Ltd. (KHC) An associate of KUSCCO Group offering end to end property solution with the Co-operative model
SACCO Star Magazine The official KUSCCO Magazine that covers news on topical issues in the SACCO and corporate world.
Item Description
Q ty
C A
Date: 23/01/2021
23/01/2021 23/01/2021
51 1| SACCO Star Magazine
Education and Training (E&T) Tailor-made training to suit your SACCO needs at local and International levels.
IRNET Independent & Assured Clarity on your ICT Investment.
Research & Consultancy (R&C)
Providing access to sound management practices.
Central Finance Fund (CFF) Your SACCO’s ultimate lender of choice.
KUSCCO Mutual Assurance KMAL is a subsidiary of KUSCCO Limited, licensed by the Insurance Regulatory Authority (IRA) to operate as a life insurer in Kenya.
OUR PRODUCTS & SERVICES
KUSCCO Centre Kilimanjaro Avenue, Upper Hill, P. O. Box 28403 – 00200, Nairobi, Kenya. Tel: (020) 2730191, (020) 2722927 (020) 2721274 Cell: 0722 206 331, 0734 699 974 E-mail: [email protected] www.kuscco.com
Advocacy Ensuring an enabling legislative and policy environment for the growth of SACCOs.
KUSCCO Housing Co-operative Society Ltd. (KHC) An associate of KUSCCO Group offering end to end property solution with the Co-operative model
SACCO Star Magazine The official KUSCCO Magazine that covers news on topical issues in the SACCO and corporate world.
www.mabati.com
THAT NEVER ELEGANCE
We guarantee a quality roofing product that lasts unlike ordinary coloured mabati. Our range of mabatis now comes in a variety of colours and brand profiles. Every Aluminum Zinc Steel base is enhanced using ColourPlus® and Optima® superior colour coating technologies for added aesthetics and extra endurance making our mabatis resistant to rusting, fading or peeling.
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55
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www.mabati.com
THAT NEVER ELEGANCE
We guarantee a quality roofing product that lasts unlike ordinary coloured mabati. Our range of mabatis now comes in a variety of colours and brand profiles. Every Aluminum Zinc Steel base is enhanced using ColourPlus® and Optima® superior colour coating technologies for added aesthetics and extra endurance making our mabatis resistant to rusting, fading or peeling.
SAFARICOM SACCO LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2020
THE POWER OF BEING UNDERSTOOD AUDIT|TAX|CONSULTING
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