- The board at Harambee Sacco is also said to have borrowed Ksh. 1. 18 billion from the Cooperative Bank of Kenya last year without the members’ approval at the Annual Delegates Conferences (ADC), the loan in addition to others secured earlier from the same bank now stands at Ksh. 3.32 billion because of interest. According to well-placed insider sources, the situation is so bad that Sacco is facing acute cash flow problems that have forced it to sell some of its prime multi-million shillings properties located in Nairobi
By The Weekly Vision
Harambee Sacco is said to have lost billions of shillings through gross mismanagement and outright fraudulent activities, according to sources within the Sacco who spoke to The Weekly Vision on strict condition of anonymity for fear of victimization. This is in addition to the loss of members who decided to join the other well-run Sacco’s.
The Sacco is also facing sharply rising loan applications from the remaining members which cannot be met due to dwindling income. The source adds that the looting is being executed by the board of directors and top managers. It has been going on for a long time now and some members who applied for loans last year have not received a cent. Loan applications from members totalled Ksh. 6 billion at the end of the last financial year compared to revenue generated from members’ savings and other sources which stood at only Kshs. 4 billion, putting Sacco’s cash flow into extreme jeopardy.
The board is also said to have borrowed Ksh. 1. 18 billion from the Cooperative Bank of Kenya last year without the members’ approval at the Annual Delegates Conferences (ADC), the loan in addition to others secured earlier from the same bank now stands at Ksh. 3.32 billion because of interest. According to well-placed insider sources, the situation is so bad that Sacco is facing acute cash flow problems that have forced it to sell some of its prime multi-million shillings properties located in Nairobi.
It is also emerging that the Ethics and Anti-Corruption Authority (EACC) is investigating claims that the Sacco’s leadership sold several properties, including the Matundu lane Property in Westlands, the Harambee Sacco property in Donholm, the Harambee members’ property in Nyali in Mombasa, and another property in Parklands without approval from members.
The source said: “As a desperate measure and to try and stay afloat, the Sacco recently borrowed Ksh1.18 billion from the Cooperative Bank of Kenya, and its latest annual report shows that the amount borrowed from the bank increased to Sh3.32 billion during the review period, up from Sh2.14 billion the previous year.”
The source said that the procurement and banking departments of the Sacco are plagued with massive fraudulent claims and imprests running into hundreds of millions of shillings that cannot be accounted for as the board and the chairman happily take home close to Ksh. 250 million in questionable sitting allowances. “There is a massive haemorrhage at the Sacco with tens of thousands of members leaving in protest against the gross mismanagement of the Sacco and the chairman’s decade’s stranglehold on the Sacco.
The thousands of members who had quit the Sacco by the end of the last financial moved with their Kshs. 6.5 billion in accumulated savings, they transferred their money to the Kenya Police Sacco whose members rebelled from Harambee to form the Police Sacco. The majority of Police Sacco members now are drawn from the military, National Police Service, National Youth Service, the former provincial administration workers, the national and county governments, parastatals and departments and constitutional bodies, most of whom were with Harambee Sacco before moving away.
Harambee Sacco Chief Executive Officer (CEO) George Ochiri and Chairman Malonza are instead blaming the move to retirement within the civil service. Before his appointment as the Harambee Sacco CEO, Ochiri served as CEO of the multi-billion shillings Safaricom Sacco Ltd. Harambee Sacco’s operating costs have been increasing at alarming levels from KSh. 274.49 million three years ago to Kshs. 2.8 billion by the end of the last financial year due to the huge financial expenses and personnel expenses.
The growth of members’ deposits and savings was hindered by almost equivalent withdrawals, where the society paid out a total of Kshs. 2.42 billion to members who withdrew in 2021, compared to Ksh. 4.82 billion paid to members who left the Society by the end of 2022. Since 2021, the loan book contributed to 81 per cent of the revenues, with loans and advances going up by 11 per cent from Ksh. 21.87 to Ksh. 26.38 billion in 2022. By the end of last year, Harambee Sacco Limited’s deficit before tax rose to Ksh. 3.39 billion compared to Ksh. 2 million surpluses before taxation in the previous years.
As a matter of fact, as early as 2012, a Sacco Societies Regulatory Authority (SASRA inspection found that the Harambee was in an acute liquidity crisis having failed to meet nearly all prudential parameters. They had a negative core capital and had material variances between the outstanding loan portfolio reports and provisions for loan losses, at the time.
It is estimated that the properties sold so far are worth over Ksh. 2.25 billion, but the appropriated cash of the said other plots are yet to be revealed to its members through Sacco’s ADC. The Front Office Savings Accounts (FOSA) are also haemorrhaging, in a recent audit report it was discovered that there were questionable figures totaling Ksh. 3 billion, further highlighting the financial mismanagement and the need for tighter controls and oversight within the organization.
