Session I - Part2 - Elizabeth Ndemo - Co-operative Bank of Kenya
Elizabeth NdemoHead of Corporate Banking and TradeFinance – 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: • The Co-operative Bank was formed through Co-operative1968 societies to deliver financial services to the Co-operatives • Bank transitions into a fully fledged commercial bank offering1994 full suite of products • Loss of Kshs. 2.3B ($27.4m)2000 • Bank makes a turnaround - profit of Kshs. 2B ($27.4m)20072008 • Bank’s Initial Public Offer – retained the Co-operative movement as a strategic shareholder
Current Status: Kshs. 170.5B ($2.03B) in Total 94 Bank Branches, 410 ATMs Assets countrywide; 2,000 Bank Agents 4th Largest Bank in Kenya Deposits – Kshs. 142.6B ($1.7B) 2.3m customer accounts 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 Saccos 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 Saccos 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 email@example.comTHANK YOU!
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