K Unity sacco eyes Sh10 billion in asset base

Deposit-taking cooperative society K Unity Sacco is banking on borrowers migrating from commercial banks and its new product offering to grow its asset base from the current Sh6 billion to Sh10 billion in the next two years.

Simon Njenga, the Sacco's chief executive officer, said the Sacco has seen a good number of new customers come on board due to its flexible lending model of 12 percent to 14 percent on reducing balance depending on the product.

He noted that the move by commercial banks to charge high interest rates on loans after the Central Bank of Kenya (CBK) increased interest rates from 9.5 per cent to 10.5 per cent.

The development has seen local banks increase interest rates on customer loans in the latest pricing cycle that will see customers deemed riskiest pay more than 20 per cent, triggered by the increase in the central bank's benchmark lending rate.

Local banks have been informing their customers over the past three weeks about the new adjustments, which came into effect this month and affect both existing and new borrowers.

Based on customers' historical profiles, the banks are charging a spread of about 6 percent on top of the base rate, meaning that some customers will pay more than 18 percent after the review.

"As you may be aware, the Central Bank of Kenya has repriced loans and a good number of borrowers have returned to Sacco and Cooperatives. From our side, we have seen a good number of new customers coming on board because of our flexible lending model," said Mr Njenga.

Further, Mr Njenga said K- Unity Sacco is pegging its growth on the real estate sector where it is targeting diaspora borrowers who want flexible financing to set up both residential and commercial establishments.

Currently, he said, they have over 500 diaspora clients and given the demand for housing and land, especially in satellite towns, and the recovery of the sector after the effects of Covid-19, there is a projection of a vibrant area both in terms of savings and borrowing from diaspora clients who may need flexible financing arrangements.

This is why we have recently launched a special diaspora account, not forgetting the huge diaspora inflows into Kenya and the business opportunities around it," he said.

Formerly known as Kiambu Unity Finance Cooperative Union Limited, K-Unity Savings and Credit Co-operative Society was established in 1974 as a result of the amalgamation of the then Limuru Marketing Co-operative Union and Kiambu Dairy Marketing Union to provide savings and credit facilities to dairy and pyrethrum societies in Kiambu.

Currently, K-Unity Sacco has over 100,000 members with a loan book of over Sh4 billion and 16 branches spread across Nairobi, Kiambu, Nakuru, Narok and Nyandarua counties.

Its mainstay is business, agriculture and dairy loans, as well as small and medium loans to the self-employed and salaried civil servants, especially in urban and semi-urban areas.