Harambee Sacco face bleak future after massive membership hemorrhage totaling to 17,730

The embattled formerly giant sacco, Harambee Sacco Society Limited is fighting survival turmoil after massive membership hemorrhage a total 17,730 members in the last three years in a row which has led to a Sh4.82 billion pay out, The Informer can authoritatively reveal.

The significant members’ flight has thrown the sacco into disarray despite hitting headlines due to mismanagement and fraud in the past.

The revelations come in the wake of unearthed Sh12billion fraud at the troubled Metropolitan National Sacco Limited attributed to insider dealings by unscrupulous senior officials aided by rogue Sacco Society Regulatory Authority (Sasra) auditors to cook books of account.

By yesterday, at least five senior managers at Metropolitan Sacco resigned ahead of the investigative forensic audit of massive loss of members’ deposits.

For the case of Harambee Sacco, majority of their members are drawn from the military, National Police Service, National Youth Service, national and county governments, parastatals and departments and constitutional bodies.

According to the society records headed by George Ochiri as the Chief Executive Officer (CEO) and Macloud Malonza as the chairman, the loss of members saw them pay a whooping Sh4.82 billion in return.

Before his appointment as the Harmabee Sacco CEO, Ochiri served as the former chief executive of the Safaricom Sacco.

Majority of exits attributed to retirement within the civil service cadres.

“Most of these are our founder members who make up the most loyal segment of our membership,” said the lender in its financial report for 2021.

Further, the sacco’s operation costs increased from Sh274.49 million to Sh2.166 billion in 2021 due to higher financial expenses and personnel expenses.

However, its annual revenue for 2021 surged to Sh4.2 billion having recorded a 32 per cent growth attributed to an increase in loan uptake, while the firm disposed of assets to boost liquidity.

“The growth of members deposits and savings was impeded by almost equivalent withdrawals, where the society paid out a total of Sh1.42 billion to members who withdrew in 2021, compared to Sh1.32 billion paid to members who left the Society in 2020,” read the report.

During 2021, the loan book contributed to 81 per cent of the revenues, with the deposit taking Sacco saying loans and advances went up by 11 per cent from Sh21.87 to Sh24.38 billion in 2021.

In 2017, the giant sacco’s deficit before tax rose to Sh1.39 billion compared to Sh197.2 million surplus before taxation in 2016.

In the past, Harambee has found itself in the cross-hairs of the saccos regulator, Sasra several times.

In 2012, a Sacco Societies Regulatory Authority (Sasra), inspection found that the sacco was in an acute liquidity crisis having failed to meet nearly all prudential parameters.

The sacco had negative core capital and had material variances between the outstanding loan portfolio reports and provisions for loan losses, at the time.

In 2015, an official at the sacco was sent on compulsory leave while interim audit of

controversial expenditures and inconsistent questionable figures of Front Office Savings Activities (FOSA) loan totaling to Sh3billion was underway.

He was temporarily forced out just three days to the deadline of submitting reconciled FOSA loan report to Sasra.

The audit targeted three lines of alleged cash fleecing conduit of imprests, I Owe You, summary balance sheet detailing bank records of loans paid up in cash and marketing vote.

The sacco management had committed to avail reconciled financial records particularly explaining inconsistent figures of Sh3billion FOSA loan.

In the past, the sacco has been bedeviled by controversies of massive financial scams and unresolved murders of senior officials.

Former Finance Manager the late Benson Ojiambo was murdered at point blank range by a lone gunman in Embakasi, Tassia Estate along Outering Road on October 29, 2012.

A week prior to his death, Ojiambo was set to appear before the Agriculture, Co-operatives parliamentary committee for questioning over the alleged financial scams massive fraud cover-ups as revealed in a confidential report by Sasra in 2012.

Ojiambo was in charge of reconciling collections from the cashiers and ATM withdrawals with the computer entries and had prepared to present a report on the ATM scheme to the parliamentary committee.

Ordinarily, saccos are allowed to borrow a maximum borrowing of 25 per cent of the total value of assets upon an AGM authorisation through a resolution by all members.