session i - part2 - elizabeth ndemo - co-operative bank of kenya
TRANSCRIPT
Elizabeth Ndemo Head of Corporate Banking and Trade
Finance – Co-operative Bank of Kenya
Kenya
BANKS AS STRATEGIC LINK BETWEEN CO-OPERATIVES ,DFIs & SMEs
Africa Finance & Investment Forum 2012 Elizabeth Ndemo
Overview:
Origin
Current status & Complimentary business lines
Co-operative Movement-Our strategy
Key focus areas
Linkages – Donor Institutions & SMEs
Conclusion
Our Origin:
1968 • The Co-operative Bank was formed through Co-operative
societies to deliver financial services to the Co-operatives
1994 • Bank transitions into a fully fledged commercial bank offering
full suite of products
2000
• Loss of Kshs. 2.3B ($27.4m)
2007 • Bank makes a turnaround - profit of Kshs. 2B ($27.4m)
2008 • Bank’s Initial Public Offer – retained the Co-operative movement as a strategic shareholder
Current Status:
Kshs. 170.5B ($2.03B) in Total Assets
94 Bank Branches, 410 ATMs countrywide; 2,000 Bank Agents
Deposits – Kshs. 142.6B ($1.7B)
2.3m customer accounts
4th Largest Bank in Kenya
Recognized as ‘The Best Bank in Kenya’ in 2010 & 2011 by the Financial Times of London
Who we are – Complimentary Business Lines:
The Bank runs three wholly-owned subsidiary companies, namely:
Kingdom Securities Ltd, the stock brokerage subsidiary
Co-op Trust Investment Services Limited, the fund management subsidiary
Co-operative Consultancy & Insurance Agency (K) Ltd which provides business advisory & capacity-building services for co-operatives
The Bank, the Co-operative Movement:
The bank extends affordable credit facilities to Saccos & its members. The following products are unique:-
Education Savings Scheme (ESS) – most critical & largest borrowing of Sacco members-specific for school fees/disbursed at the beginning of the year.
(The society members get a loan three times their savings for a period of twelve months at 12%p.a. Savings at 1.5%)
Member Development Loans – A loan granted to meet development needs of a member.
(Term loan is for max 36months and is x3 amount of savings held)
The Bank, the Co-operative Movement-cont:
Working Capital loans: To fund cash flow gap Sacco's face between their cash flows and loan demands for their members. (Tenure is 12 - 60 months)
Sacco Revolving Advance – facility granted to Fosa to fund advances to members
(Facility is revolving but limits are reviewed every 6 months)
Dividend Reserve Account - provides an avenue for Sacco's to save & comply with new regulatory rules
Our Strategy:
Unique suite of products to the Saccos
Ring fencing Saccos against commercial banks who target them for buyout
Capacity Building through our consultancy services arm, providing financial & advisory services
-Facilitate set up of Saccos, staff recruitment, strategy formulation and implementation
-Turn around co-operatives from loss making to surplus, e.g. Masaku Co-operative Society
Our Strategy…cont:
Front Office Service Activity: The bank has been part of the development of FOSAs for the Co-operatives
- it has enabled co-operative members receive affordable banking services outside formal banking sector
- Rolled out Sacco link debit card, enabling members utilise ATMs, goods & services from visa branded outlets
Financial Support to farmers from land preparation to harvesting
Key Focus Areas:
Agriculture – facilitating financial support to farmers-Dairy, Livestock, Coffee, Tea etc.
Out growers Financing –Barley Farmers-EABL, Sugarcane-KISCOL
Value Chain Financing - Githunguri Co-operatives
Asset Finance – Processing plants, factory upgrades
Key Focus Areas… cont
Alternative Delivery Channels – innovative solutions like Sacco link ATM cards, Agency Banking, Mobile & Internet banking
Strengthening of the newer Saccos with structures so that their growth is sustainable
Linkages to Donors & SMEs:
Custodian of various donor funds key to enhancing Agri-business Co-operatives & SMEs (KfW, EADD, BMGF)
- KfW - Small Holder Irrigation Project in Mt. Kenya, enabling farmers use irrigation to produce horticultural crops
- $2.5m GoK & German Development Bank
- $1.4m disbursed to 4 irrigation schemes (75% on track)
Challenges:
Refusal to sign up with a marketing group
Political interference
Donor dependency
Linkages to Donors & SMEs…cont
Capacity Building activities financed by donors (FEMO)
Livestock development Initiatives (BMGF)
Renewable Energy/ Energy Efficiency Projects (AFD)
Credit Lines for SMEs & Agri-business in manufacturing industries (Ariz Fund)
Agricultural Productivity Programme – ‘Kilimo Biashara’ targeting specific food crops (WB)
Conclusion:
Banks are a critical link to Co-operatives, DFIs and SMEs as they are instrumental in ensuring end user is well served
It is a role that The Co-operative Bank of Kenya will continue to play as it has enabled us achieve the milestones thus far
For more information, contact:
Mrs. Elizabeth Ndemo
Tel: +254 20 327 6181
THANK YOU!