Saccos have capacity to undertake infrastructure projects, says PS

Co-operatives Principal Secretary Ali Noor Ismail. (Photo: Moses Omusula/Standard)

The co-operative sector has adequate financial muscle to undertake some of the mega projects outlined under the Vision2030, says Co-operatives Principal Secretary Ali Noor Ismail.

He said the societies currently control an asset base of about Sh1 trillion, resources enough for the sector to invest in viable institutions identified for privatisation by the Government.

The PS said strategies are being explored to have Saccos listed at the Nairobi Securities Exchange (NSE) to enable them raise funds to undertake projects.

Listing, he said, would also open up the credit unions to new investors.

In an interview in his office recently, Ismail said the movement has matured and gained necessary strength to pool resources for new business opportunities.

“Co-operatives should be encouraged to apply the co-operative principle by pooling resources together, either through ventures or mergers,” he said.

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“The pooled resources will provide adequate finances necessary to implement mega projects including infrastructure development (such as) metropolitan light rail systems, power generation and distribution, roads, modern housing estates and mining,” said Mr. Ismail.

The Sh1 trillion Sacco asset base is enough to finance construction of 25 superhighways at a cost of Sh32 billion each and can fund three Standard Gauge Railway (SGR) lines similar to the one recently launched.

Co-operatives, said the PS, currently control over 30 per cent of national savings and contributing over 40 per cent of the country’s gross domestic product.

For example, Mwalimu National Sacco’s asset base of over Sh37 billion makes it the largest financial co-operative in Africa.

The Sacco in early 2015 acquired a 51 per cent stake in Equatorial Commercial Bank at a cost of Sh1.6 billion, which later rebranded to Spire Bank.

In other sectors, co-operatives control a substantial stake. For instance, they control more than 80 per cent of the Kenyan coffee value chain.

The movement employs about two million people directly and indirectly.

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