Archive for category: World News

Gutu,Zimbabwe: The Ministry of Women Affairs, Gender and Community Development has to date registered 600 cooperatives in its database with a membership of over three million people under the sector countrywide.

Women Affairs Minister, Dr Sithembiso Nyoni, revealed this during an AFM Church’s royal queen conference at Chatsworth in Gutu, an event that was also graced by First Lady, Auxillia Mnangagwa.

Dr Nyoni said a total of 7131 women in Masvingo had opened accounts with the recently established Zimbabwe Women Microfinance Bank (ZWMB) as part of Government efforts to promote women and community development initiatives.

“My ministry has many departments, but I will zero in on empowerment. Women should have their own business so that we are not oppressed, but being submissive to our husbands. Women need training and my ministry is ready to provide that training wherever you are as congregants,” she said.

“So far, we administer more than 600 cooperatives across the country with a membership of at least three million people. In Masvingo province, 7 131 women have opened accounts with Zimbabwe Women Microfinance Bank (ZWMB).”

Dr Nyoni said people in Masvingo had also formed and registered fishing projects at the multi-million Tugwi-Mukosi Dam with many beneficiaries coming from Chivi District. She said the province had close to 260 fishing co-operatives of which 128 were in Chivi.

“As women in church you can also buy cages at the dam, to be part of fishery projects and also form savings cooperatives where you save your money,” said Dr Nyoni.

Also read: Women Urged to Join Cooperatives, call for more inclusion in Leadership.

Stop dreaming about jobs abroad women, youths told

She said government through her ministry had established incubation hubs to provide platforms to equip women with different hands-on skills. The incubation hubs, she said, were located in Harare and other major cities.

“We have enough incubation hubs that can train women on how to bake bread whose price is beyond the reach of many. In addition, we also want to promote our traditional food through cultural food festivals that we will hold next week. Our First Lady, Amai Auxillia Mnangagwa is spearheading this.

“We also market your products at the Zimbabwe International Trade Fair (ZITF), provincial fairs and I also encourage you as AFM to do your own fairs,” said Dr Nyoni.

She acknowledged that some women were short-changed in certain business deals, but said government was committed to economically empower them through the introduction of financial facilities to improve access to funding.

Dr Nyoni said women can also make use of the Small and Medium Enterprises Development Corporation (SMEDCO) to access funding for their cooperatives.

“We also have a community development fund and women’s development fund. This fund is accessed through the ministry. In every ward, we have our officers who can assist you to access financial services.

“In Masvingo, we have partners that work with the Women’s Bank such as Metbank and NetOne, which provides a mobile platform for account holders. Women can use their phones to apply for loans,” she said. (Source/ The Chronicle)

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Co-operative organisation has called Saccos to trade at the Nairobi Stock Exchange and buy government securities to raise adequate funds and register a growth to their members.

According to Co-operative Alliance of Kenya chief executive Dan Marube the societies depending on members share contributions, internal reserves and deposits to lend to the same members have unlimited sources of funds.

Savings and Credit Co-operatives should trade at the Nairobi Stock Exchange and buy government securities to diversify their revenue portfolios.

Co-operative Alliance of Kenya chief executive Dan Marube said most Saccos currently heavily depend on member’s savings, internal reserves and deposits for their lending.

“This can be taken up as a business decision on the less risky instruments rather than a policy, to raise funds that can be lent to members at affordable rates,” Marube said.

In its draft 2019 National Co-operative Development policy, the alliance proposes that Saccos participate in national payment system and agency banking.

“The policy objective will enhance financial deepening and investments through interventions in development of a regulatory framework for co-operative enterprises to raise capital using capital market instruments and the establishment of a secondary market for cooperative securities,” says the draft policy stated.

By 2017, CAK had 13,200 Saccos with accumulated savings and deposits of over Ksh430 billion, Ksh441 billion in loans and Ksh601 billion in assets.

The Saccos had a membership of about 5 million persons.

“Despite this notable success, the Saccos are unable to accumulate savings and deposits fast enough to satisfy their members appetite for credit,” says the policy.

Due to this, Saccos rely heavily on loans from commercial banks to satisfy their members borrowing needs defeating the very purpose of coming together.

The problem is further compounded by the emergence of digital platforms offering access to quick loans.

According to Marube, the new venture would be a viable commitment especially if a society has enough funds.

The alliance has also raised worries on the practice of hypothecation, where debtor or third party pledges collateral for credit by financial institutions.

The practice has tended to encourage lenders not to evaluate the business case of the society borrowing which is mainly to increase produce, value addition or revenue, while relying on member earnings or payroll deductions for society cash flow projections.

“The same lenders have tended to continue to recover loans from members’ funds instead of realising the secured assets in case of default,” it added.

Despite this, the co-operatives expect to continue competing with some of the financial institutions over the same space despite their inability to raise funds through the national financial networks. (Source/ The Star)

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Kenya: Kenyans are saving much less with pension schemes than experts recommend as daily basic needs and other saving and investment opportunities take priority, reveals a NationNewsplex review of pension data.

Consequently, pensioners are leading a much lower quality of life than they did during their active years.

Several studies show that in most cases pension income is way below what the pensioners used to earn before retirement. On average, the monthly pension received on retirement is equivalent to a third of retirees’ last earnings, according to a study that covered 65,000 members from 200 pension schemes by financial services firm Zamara Group. Another survey by Enwealth Financial Services Limited, a social welfare financial services company, puts the rate much higher at 55 percent of last wages. The Enwealth survey worked with a smaller sample involving 515 pension scheme members.

“Currently, the biggest competitors to pension schemes are saccos and land because Kenyans are not finding what they need in pension schemes. If we can widen the scope, we can achieve a lot,” says Mr Sundeep Raichura, Zamara Group CEO.

But both firms point out that the figures are way below the 75-80 percent replacement rate recommended by pension and personal investment experts to enable individuals to maintain the same standard of living in retirement. This implies that poverty lurks for many people once they hang up their boots, unless they have a retirement plan that also includes other sound savings and investments.

However, such alternative investments are not a perfect replacement for a pension scheme. Good habits such as maintaining a savings bank account, having an emergency fund and promptly repaying loans do not guarantee a comfortable retirement, since such resources can always be used way before an individual retires, according to the Enwealth Financial Services report, Retirement Confidence: How well are Kenyans prepared for retirement?

Despite the reality that Kenyans are falling short in their plans, a majority of those surveyed by Enwealth are looking forward to a comfortable retirement, with a significant number very confident they will outlive their savings. Nine in 10 respondents surveyed said they were either very confident, confident or slightly confident about their financial state in retirement. A similar ratio had no worries about adequately meeting their daily and long-term care expenses and medical costs. One in seven said they were very confident they would outlive their pension savings while another two-thirds were either confident or slightly confident.

Data from the Retirement Benefits Authority (RBA) indicates that there are 3.2 million members registered, with the 1,287 pension schemes in the country, over five times the 600,000 in 2006.

But this accounts for just one in six of wage-employed workers, both in the formal and informal sectors, and the same ratio among Kenyans age 24 and above as at 2016.

Mr Sundeep Raichura, Zamara Group CEO, says the reason most pension schemes are not attractive is that they are designed in such a way that funds are locked in until a certain time, thereby they do not cater for immediate and pressing needs. He thinks the scope of pension schemes should be expanded to allow a portion to be taken to sort out emergencies.

To boost the uptake of pensions among the public, there is a need to expand the priorities within the schemes so that they can actually serve the needs of the people.

“Currently, the biggest competitors to pension schemes are saccos and land because Kenyans are not finding what they need in pension schemes. If we can widen the scope, we can achieve a lot,” he says.

Similar sentiments were recently echoed by the retirement benefits regulator during the launch of the RBA 2019-2024 strategic plan when CEO Nzomo Mutuku said a product with a wider service than just savings was necessary to enable people in the informal sector to borrow against what they have set aside for retirement.

The Enwealth survey that involved Kenyans with pension plans showed that pension savings come third (15 percent) in the various modes of investments preferred, after real estate (41 percent) and land (20 percent). Saving cash in a bank came last at two percent.

Due to low savings, two in five pension schemes are below the level required to enable one to maintain the same lifestyle they had before retirement, shows the Zamara survey.

But many clients might not even know it because many schemes do not provide adequate information that can assist them to make proper decisions in the form of financial targets.

When was the last time you got to know how much your pension savings have accrued, or how much more you needed to contribute to be guaranteed a stable retirement? Despite the assurance of a lump sum of money at retirement, has your pension scheme briefed you on the looming shocks such as health costs or inflation during your retirement years?

The study by Enwealth showed that of the 66 percent of pensioners that sought knowledge about their retirement savings from their employers, 56 percent accessed the information, presenting a 10 percent information gap.

Apart from competing priorities, little information and low financial literacy, some people also see their sunset years as too distant and not worth attending to, with Mr Raichura asserting that even people who should know better do not make an effort.

Poor coverage

The informal sector is largely uncovered by the available pension schemes. One effort made to address this gap was through the introduction of the Mbao Pension Plan in 2009, in which any Kenyan above 18 years could be contributing, via M-Pesa, a minimum of Sh20 daily, Sh500 monthly or Sh6,000 yearly, without any penalty for a lull in contributions. The fund has over 100,000 members, but this is less than one percent of the 14.8 million people engaged in the informal sector.

Lack of trust

A move by the National Social Security Fund (NSSF) to compel workers to save more was resisted by the Federation of Kenya Employers (FKE) and the Central Organisation of Trade Unions (Cotu) through a court order in 2014 after FKE complained that employers, besides implementing statutory NSSF deductions, had in-house pension schemes in which they contribute higher rates and thus the increase would compel some to stop these private arrangements.

Mr James Chege, co-founder of Usalama Tech Group Limited, an IT start-up company with four employees, is concerned about the financial costs the business would have to incur once its staff grows but considers such increased contributions a worthwhile investment if the workers would receive all their dues on retirement. “While the new regulation will hugely affect firms with many employees, I would not have an issue if it would have tangible impact on the employees once they retire, but the fund (NSSF) must show what the increase directly translates to once we retiree,” he adds.

Given the recent scandals dogging some of the public pension schemes, many Kenyans are less willing to increase their contributions, concerned that they will not benefit from the fruits of such higher contributions if the fund is not properly secured.
For instance, about Sh970 million that NSSF had banked with Chase Bank and Imperial Bank could not be accounted for after the two banks were placed under receivership, according to the Auditor-General’s NSSF Audited Financials for the year ended June 30, 2017. Only about Sh27 million was recovered from Chase Bank. The audit report also revealed stalled construction of the Hazina Trade Centre in Nairobi, with Sh1.9 billion already spent on the project.

The state-run pension scheme also had its total expenses (Sh5.5 billion) as a share of total assets (Sh198.5 billion) standing at three percent, above the set ceiling of two percent, implying that less was available for investment.

The RBA has already warned six public universities called out by the Auditor-General for failing to pay Sh5 billion worth of pension arrears that they risk losing their pension assets. Pensioners under the Kenya Ports Authority Pension Scheme also moved to court last week to bar the fund’s trustees from transferring pension houses to real estate agents, over fear of a hike in rent and evictions.

Lump sum

The 2019 FinAccess survey shows a drop in the share of Kenyans saving for retirement, be it in pensions or otherwise. About one in four (23 percent) Kenyans age 16 and above saves for old age, a decline by half from two in five (44 percent) in 2016.

Whether people save for the future or not is also dependent on their socio-economic status. The reluctance to lock into a pension scheme a sizeable share of one’s income is not only pervasive in public pension schemes.

The study by Zamara indicates that nine in 10 Kenyans with private pensions choose to have back the maximum possible amount of their retirement savings when they leave employment or change jobs, indicating that they might spend it and would have to start saving for retirement all over again in their next ventures. It also shows that 100 percent of members of provident funds opted to access their benefits as a lump sum and used all within less than three years of retirement. (Source /Daily Nation)

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KAMPALA, UGANDA: A sparsely attended parliament this afternoon agreed to pass the Cooperative Societies Amendment Bill (2016) for second reading, welcoming the move by government to revive cooperative societies and calling for the strengthening of ministerial oversight over them.

The Bill, which has been under consideration by the Committee on Tourism, Trade and Industry seeks to among others, amend the Cooperatives Act CAP 112 to strengthen legislation and supervision of all types of Cooperatives, guarantee safety of member savings, promote member empowerment, and improve governance for the sustainability of cooperative enterprises and other related matters.

It also provides for regular audits on the operations of all existing cooperative societies and suggests term limits on the leadership of cooperatives across the country.

Speaking during the tabling of the committee report, Committee chairman and Nansana Municipality MP Robert Kasule noted that Cooperatives contribute to Food Security by helping small scale farmers, cattle keepers and other producers to solve various challenges that confront them in their endeavor to produce food.

He however warned against the rush to institute blanket term limits on the leadership of all cooperative societies across the country, noting that the country has few people with sufficient knowledge and experience of and in cooperatives management, yet the Bill does not only not provide for training in cooperatives development, a cap on the tenure of leaders would deny especially rural-based cooperatives leadership expertise, which is in limited supply.

“Some primary SACCOs like Wazalendo have term limits in their by-laws, which is good for institutionalized cooperatives that have a large pool of expertise. But exceptions should be provided in the law to nurture the growth of small, rural based SACCOs, which rely on a few experienced individuals to lead them,” Sebunya noted.

He said that his Committee had also observed that the financial implication of the bill is inadequately guaranteed by the certificate of financial implication, because the ministry had not gotten additional budget provisions for the implementation of the Bill’s provisions.

In the just passed Ministry of trade budget, Cooperatives Development remains underfunded by shs.8.19 billion, with some of the budget item’s program’s falling under unfunded priorities.

In regard to developing the necessary human resource competencies, the Committee noted that although the Implementation strategy of the National Development Plan II recommended the review upgrading of Kigumba Cooperatives College as a Center of academic Excellence in cooperative skills development, the institution’s infrastructure remains dilapidated, and the Ministry has not presented any plans to revamp it.

As such, the committee recommended that cooperative colleges like Uganda Cooperatives College Kigumba, and Uganda Cooperatives College Tororo should be revived and upgraded in infrastructural and all technical aspects to provide adequate training in the areas of cooperatives, in order to sustain cooperatives development across the country.

It also recommended that the Ministry of Finance, Planning and Economic Development should consider the new and expanded mandate of the ministry of cooperatives, and submit to Parliament a realistic certificate of financial implication that reflects government’s commitment to cooperatives development.

Speaking to the motion during plenary, MPs from across the political divide called upon government to expedite the revival of cooperatives, arguing that they should not have been allowed to die in the first place.

“Cooperatives are a driver of development for any society. Once farmers come together in groups, they’re able to negotiate better as they speak with a common voice, and get better proceeds for their produce. So the proposal to revive them and strengthen the ministry (of cooperatives) is highly welcome on my side,” noted Hon. Nyakecho Annet from Tororo North County.

Budadiri West MP Nandala Mafabi who also doubles as Chairman of the Bugisu Cooperative Union – one of the most enduring Cooperative societies in the country, called for a clause to be inserted in the bill to provide for the return of the cooperative Bank, noting that the present law requires all cooperative societies to deposit their money with the cooperative bank, which is no longer in existence.

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