Harambee Sacco bets on automation to cut fraud

One of Kenya’s leading savings and credit co-operatives by member deposits —Harambee Sacco— had a run-in with the Competition Authority of Kenya (CAK) last year for inaccurate representations on loans issued to its members.

For that offence, the CAK fined it. Earlier in 2017, it announced Sh247.4 million dividends despite making a Sh145 million loss while a year earlier it had posted an after-tax profit of Sh125 million.

In a nutshell, it has been grappling with fraud among other challenges, partly dimming its rating in the saccos sub-sector.

Against the backdrop of these troubles for the sacco drawing the bulk of membership from government workers, Business Daily’s James Kariuki sat down with the Harambee chief executive, Dr George Ochiri, who has been at the helm for slightly more than a year to talk about his turnaround strategy.

Harambee Sacco has had an unpalatable past that threatened to sink the giant civil servants sacco; where are we now?

It remains part of us with several criminal and civil suits pending in court since 2012. We are rewriting our future with stringent mechanisms to deter siphoning of funds from the sacco. We fired five staff found perpetrating the same and their cases are with the banking fraud investigations unit. We also have an internal audit and risk analysis system that now enables us to detect anomalies within a short time.

Have you recovered lost funds yet?

The court process takes long but we shall pursue justice to the end. I am rallying my team towards building value for our 73,000 members.

Before, it took us two years to detect theft of funds but now we have systems in place that help us detect anomalies within the shortest time possible. We have also activated new streams to rake in revenues from our investments.

We also have a whistleblowing facility that has brought in useful information that helped us curb evil schemes before they occur.

Please go ahead and name them.

Through our subsidiary, Harambee Investment, we recently bought land in Nakuru and within Kantafu in Nairobi that was sold to members.

The Nakuru sales are ongoing but the Kantafu 10-acre plot sales were finalised and title deeds issued.

Has the turnaround strategy borne fruit?

We disbursed Sh15 billion loans to our members, being a 36 percent rise from Sh11 billion dished out the previous year and our monthly loan repayment collections rose by 43 percent to stand at Sh930 million, up from Sh650million reported in 2018.

Non-performing loans have been reduced to two percent from 2018’s reported nine percent against the active loan portfolio.

How is Harambee re-inventing itself to remain relevant to its members?

Our board, management and staff were retrained to embrace a new culture that allows each to work for the benefit of our members. We have mooted new departments to keep abreast with changing times where transactions are carried out on a digital platform

Members can now apply for an emergency loan of upto Sh250,000 via our app and a lot of feedback is also sent to us online.

We have automated processes and are on course to complete the digitisation programme by year end.

This ensures members save on time and can transact round the clock without the need of visiting a physical branch.

What is in store for Harambee Sacco members?

We are an active proponent of Kenya Mortgage Refinancing Company and plan to utilise our properties in helping members to acquire housing units on a rent-to-own basis.

Nanyuki, Kisumu and Siaya will be our flagship properties under the affordable housing schemes.

Our members will be the first priority as well as discounted rates to spur uptake within prime locations that we own land.

What is memorable about your one year stint in office?

There has been a culture change among board, management and staff where everyone understands the customer comes first.

We are now working towards enhancing member value and could see us become the preferred sacco in five years time.

An assessment reveals that the number of co-operators is falling. As a society, what are you doing to remain relevant to the young as well as the other members?

True. The numbers have fallen from 76,000 members in 2018 to 73,000 last year, which is solely blamed on a high number of workers leaving the civil service on attainment of 60 years retirement age and failure by government to employ new workers on time to bridge the gap.

We are employing a data analytics team that will inform future products and services that we offer our members.

Harambee wants a needs-based approach that adds value to our members.

That informs our 2020 theme of making our sacco the go-to sacco.

As a restoration CEO, has Harambee achieved its desired goal?

Everyone in Harambee is keen on putting the bad past behind us where all activities will be transparent with staff fully aware of their individual role towards serving our members for a better future.

Our resolve is decisive enough to make a statement to our members that no ills will be tolerated and our sole task is to grow the wealth of our members.

Tell us about some of the specific actions Harambee is taking in this restoration journey.

We shall soon hire a mortgage officer to oversee our housing investments as well as advise our members on the best products to take based on their savings.

This will see us go across the country buying parcels of land that members would buy for personal use and develop houses for them both for residential and commercial use.

We have properties within affluent locations that will be sold at premium prices and the same spent on developing properties for members.

This means we shall use internal funds to build houses and the benefits made will be passed to members.

We are planning a business development department to inform members on the best investments to make for good returns while in employment and in retirement.

Harambee Sacco will ensure that we have a post-retirement product for our members whom we have known and served for years.

What about young members?

We are hiring staff to be in charge of our social media platform and analyse member data to inform products on offer.

Young members will have ready information in their palms via mobile internet. It is an interactive site that will inform future products that reflect our youthful clientele.