BIBLIA SACCO LIMITED
Biblia Sacco
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Chairman’s Report to the Annual General Meeting Held on 18th April 2009
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I. Introduction
For over 30 years, the chairman in office was able each year to report enthusiastically on the events of the past year. That was also the case one year ago just after the post election violence that significantly eroded our confidence on our economic pillars that seemed scrambling down. We however managed through the year and were able to sustain our earning. In 2008, things were indeed different. The first half of the year experienced the worst violence in the history of the Country leading to a coalition government that is currently in power. The second half of the year was marked by the financial crisis, recession and high inflation. You will recall that we started the year with an inflation rate of about 10% but closed the year with a rate of about 29%. This significantly increased our cost of operations as prices went up and as management devised ways of sustaining our bottom line. I wish to state that many companies in the country downsized and others closed but we thank God that we remained solid. It was a sudden and drastic change all in the same period of time, and it had dramatic consequences in many lines of our business. We certainly did not manage to emerge from the crisis unscathed either. As members, you may have expected an increase in dividend pay out rate and you may therefore not leave this room as enthusiastic as in past years. My message to you is that by all standards, we did well and to the best of our ability. We managed to sustain income expense ratio and the dividend rate has remained constant. Our member deposit and dividend lump sum have both grown by 16% and our membership continues to increase. We do acknowledge there are challenges ahead but our trust and faith in God has given us hope that our destiny is in his hands. We have in the past struggled to embed working policies while at the same time positioning ourselves to respond to members’ needs. This resulted to an increase in the number of staff and some reorganization in assigning responsibilities. You are likely to see more changes in the coming months as we decentralise our operations from management committee to staff. II. Achievements in 2008 The key highlights for the year 2008 are as stipulated below: 1) Growth During the year 2008, our income grew by 17% mainly from the interest on loans and the refinancing processing charges. Our member deposits equally grew by 16% from Ksh.212m to Ksh.247m. The proposed dividend sum has also increased by 16% and members will therefore receive more due to progression in savings compared to last year. The dividend rate of 8.34% remained the same despite the many challenging forces in the market. Members will notice that our cost of running the SACCO increased by 21% due to several factors. The high inflation in the country and increased spending in some line items such as electricity, telephone and committee expenses is major contributor of the high cost. These were however reflected in our annual budget and only went above the budget by only 5% which is within the generally accepted margins. To cushion our rising costs, the management has diversified the SACCO products in order to raise the income level. These will be rolled our within the year and are already reflected in our new brochure for your reference. We expect that this will grow our loan portfolio and increase our income without necessarily increasing our operational costs. We plan to grow our surplus in the coming year by 20% and hope this will trickle back to members. This will however require rigorous marketing of our SACCO to prospective members.
2) Staffing Issues In the process of developing and reorganising tasks, one of the staff (Jane Wahome) left for the US and the management decided to replace her and recruit an additional staff. This was done during the year. The management has introduced an appraisal system that is more focused to ensure good service to members. We are currently assessing our capacity to deliver and more changes may be expected in the near future. Our core business is in lending. During the year 2008, our loan portfolio reached a high Ksh.270m. We experienced an overwhelming loan applications that was some times more than the available cash. This resulted to some backlog in loans and members could therefore not access loans within the expected period. The newly introduced refinancing loan was the most popular with a majority of members coming back for refinance. Since this gave members an opportunity to reorganise their repayment period, our cash flow did not meet the member expectation. The management therefore negotiated an overdraft with Cooperative bank and is monitoring how best to minimise losses in form of bank interest. We do hope that with the new products, the cash flow will stabilise and loaning will be back to normal. We do apologise for the back log. 4) Communication and member information During the year, the management evaluated available options of disseminating information to members. There are many members who complained of not being informed when there are important meetings such as education and AGM. To respond to this need, a website has now been set up and running. This will be launched today. We encourage members to visit the website for more information. We hope to upload documents so that we save members time of collecting forms from the office. We have also encouraged the office to reach you though your mobile and we request that you confirm with the office that the information we have is accurate. It is for this reason that all new loan applications are now required to contain all these personal information. We are also in the process of updating our member files and therefore request that your copy of ID, PIN and passport size photograph be filed with us. 5) Systems and policies As the SACCO continues to grow, it has become apparent that our systems need to be upgraded. The management will therefore embark on formulating various internal policies that will support our operations. Of important to us is the accounting system that requires an overhaul. Several attempts to improve on this have been futile and the management will be investing in accounting software that will not be disappointing to members. This will be backed by a modern computer server. 6) Strategic Plan As you are aware, we have been in the process of implementing our three year strategic plan. A lot of the tasks were more in putting structures in place and improving our operations. A lot have been achieved over the last two years. This is witnessed through, increased number of products, introduction of SACCO website, new internal policies such as investment policy and data management policy etc. The capacity to implement the strategy has been a challenge to the management as this requires dedicated staff and time to achieve the strategic goals. We have therefore not progressed as initially envisaged but the management is committed to full implementation of the strategic plan. The full progress report is open to members and you can visit the office for further information. It is the view of management that the implementation period may require extension rather than developing another strategic plan. This will require several steps by the management. The first is to carry out an audit on the required skills and go through a matching process. This will entail an appraisal of the current staff and their capacity to implement the strategy and a review of the current management structure and required skills. The management has for this reason developed some measurable targets (through the sub-committees) that will guide the process of full implementation. It is the management proposal to extend the implementation by two years to make it a five year strategic plan. 7) Dividends In the past, it has been the tradition of management to propose dividend distribution. Usually the proposed dividend only leaves the statutory reserves in our books. This is not healthy for a growing SACCO and the management is proposing retention from the surplus. The retention can later be used for capital items or for investment that would later yield returns to members. In view of the above, the management is in the process of developing a dividend policy and will be proposing some dividend pay out ratios on the surplus. The proposal will be presented in the next AGM. For the year 2008, the management is proposing to distribute Ksh.21,069,553 to members. This is an equivalent of 8.34% on deposits. III. Conclusion In conclusion, I am delighted to assure members that the SACCO if financially sound. I also wish to assure members that the management is very optimistic that the coming years will yield better results and our investments are not in vain. I wish to thank all of you for the support you gave us in 2008 and for your dedicated savings during the year. I wish to also thank the members of management and the supervisory for their continued support. To all of you, may God bless you! Yours Sincerely Walter Aoko |
Ladies and gentlemen! I welcome you to this year’s Annual General Meeting. I wish to recognise the presence of our Cooperative officer and any person who may be attending the AGM for the first time. You are all most welcome!