Kenya suspends loans for ailing Metropolitan National SACCO
NAIROBI-The Kenyan government and the interim board of the ailing teachers-owned Metropolitan National SACCO Limited, have suspended long-term loans to members, reached out to creditors for loan moratoria and embarked on closure of some branches as part of key measures to sustain the operations of an institution ruined by years of mismanagement and embezzlement of funds, says The EastAfrican.
The state is also discussing with unnamed commercial banks to help the SACCO meet its financial obligations to members as the process of recovering member loans and looted funds gets underway.
“We are working with all the relevant partners to ensure that the SACCO is back on track. To me within a period of three years the SACCO should be able to turn back to normalcy but even now the SACCO is fairly back to normal by being able to meet its obligations,” David Obonyo, Commissioner for Co-operative Development, is quoted as telling The EastAfrican.
“We have talked to the financiers to assist the SACCO to meet any financial obligations. We have advised the SACCO to concentrate on short-term loans [six months to 12 months]. We are also talking to the creditors to give the SACCO a short-term moratorium to enable them recover from all these issues,” Obonyo said.
According to Obonyo, several branches Metropolitan National SACCO considered “nonviable” have been closed down to avert further financial drain, with the SACCO reverting to digital platforms to serve its members.
“We are working with the interim board to do some few reforms and one of the key issues is how to reduce the operational costs because that is one of the areas where the SACCO was losing or spending a lot. So, we are trying to close non-viable branches and opt for digital platform to serve members without necessarily having physical branches. So, they have closed a few branches to be more efficient and cost-effective. We want to leverage on technology to enhance efficiency,” he said.
The latest reforms come as the state gears up to start issuing surcharging notices to former managers and directors of the SACCO who have been adversely mentioned in a state-sponsored inquiry report over the misappropriation of funds and manipulation of the financial statements of the SACCO.
These officials are on the sport for embezzling SACCO funds by operating ‘cooked’ and fictitious financial statements which they used to issue dividends and interest on deposits while the SACCO was in the red.
The manipulated books of account, portraying the SACCO as having a financial surplus when indeed it was making losses.
“We are just issuing surcharging orders. It is a process but that is what we are planning to do,” said Obonyo.
“Those surcharges are being prepared and they are about to be completed. We intend to start issuing these surcharging notices in the next two weeks or even earlier than that to those affected people who have been found culpable,” he said.
In April last year, the Kenyan government directed a probe into the by-laws, working and financial conditions, management, and the conduct of both present and past directors of the Metropolitan SACCO [formerly Kiambu Teachers SACCO].
He constituted a team of four officials from the cooperative sector to carry out the investigations.
In October 2022, the government disbanded the SACCO’s board of directors and banned some officers from holding office in the cooperative sector for at least 10 years.
As a result, a caretaker committee was constituted to help push through the SACCO’s recovery plan.
Metropolitan National SACCO has a membership of about 75,000 of which the majority are teachers, started sliding into financial trouble in 2019 following a surge in bad loans that squeezed its liquidity and ability to meet member withdrawals.
https://thecooperator.news/dont-base-your-success-on-dividends-kenyan-saccos-told/
Buy your copy of thecooperator magazine from one of our country-wide vending points or an e-copy on emag.thecooperator.news
Views: 1
