The Kenyan government has set up a team of top co-operative sector officials to investigate the financial and governance structures of the troubled Metropolitan Sacco, signalling the extent of the rot in the Teachers-owned Sacco.
Metropolitan Sacco has been in the limelight for growing member complaints over its operations.
The EastAfrican has learnt that the government also wants the team to investigate the management and the directors of the Sacco (formerly Kiambu Teachers Sacco), which has so far frozen dividend payment for the year 2021, with signs of liquidity challenges.
The probe comes barely three years after Co-operative Bank took over the consultancy role in the society with hopes of turning around the fortunes of the institution.
In a gazette Notice No 4558 dated April 22, 2022 the Commissioner for Co-operative Development David Obonyo has 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.
Mr Obonyo has constituted a team of four officials from the Cooperative sector to carry out the investigations and report back the findings in 15 days
According to the gazette Notice, the team comprises Director of Co-operative Audit (Javel Murira), Manager in-charge of regulations (Dr David Gitonga Kahuthu), Principal Co-operative officer (Kennedy Otachi) and Senior Compliance Officer (Daniel Mue Mwatu)
Metropolitan Sacco is under scrutiny following increased member complaints on a wide range of issues, including refusal to refund entire share capital after a member exits the Sacco, lengthy loan approval process, non-functional mobile banking services and withholding of 50 percent of member dividends.
The Sacco abolished dividend payment for the year 2021, according to the notice of the annual general meeting (AGM) dated March 25, 2022, in which the dividend proposal failed to feature on the agenda.
The Sacco began sliding into financial trouble in 2019 following a surge in bad loans that squeezed its liquidity and ability to meet member withdrawals.
The Sacco, which has a membership of about 75,000 of which majority are teachers, issued gross loans amounting to Ksh16.7 billion ($145.21 million) against a total income of Ksh1.99 billion ($17.3 million) in the year 2020, according to the Sacco Supervision Annual Report (2020).
Its total assets and deposits stood at Ksh16.73 billion ($145.47 million) and Ksh7.64 billion ($66.43 million), respectively, in the same period.
In July 2019, Co-operative Bank took over a consultancy role in the Sacco promising to support it by ensuring it has adequate working capital for adequate service delivery to its members.
The lender, which thrives on a unique banking model based on the Co-operative moment, also offered to provide advisory services through its subsidiary, Co-op Consultancy, to build capacity for the Sacco’s long-term sustainability.
The bank also promised to restructure the Sacco’s funding requirements to better manage the members’ monthly loan demands as well as the overall liquidity flows.