New Kenya Program to Help Meet Future Regulatory Requirements

Madison, WI—Africa's largest credit union network, Kenya's Savings and Credit Co- operative (SACCO) system, will soon be working with World Council of Credit Unions, Inc. to improve its prudential soundness and management quality through a three-year training program financed by the Financial Sector Deepening (FSD) Trust.

Kenya's reported 3,000 SACCOs provide financial services to almost three million members. In the face of increasing competition from banks, they will soon be challenged with meeting standards set forth in a proposed SACCO-specific law. In order to become properly registered and licensed and protect approximately US$1.3 billion of savings entrusted to them, SACCOs must strengthen their financial condition, policies and management.

Through the SACCO Capacity Building Program (SACCO-Cap), World Council will train consultants and consulting organizations on how to help SACCOs meet upcoming regulatory standards and increasing competition.

"SACCOs have traditionally bought services from the same providers in Kenya," explained Erick Sile, SACCO-Cap program manager. "These providers not only lack capacity to serve the entire SACCO sector, but they are also ill- equipped with innovative tools that are necessary to help SACCOs compete in an increasingly competitive financial sector.

"On the other hand, non-traditional consulting service providers to SACCOs still do not perceive the SACCO sector as a niche," Sile continued. "The SACCO-Cap project will help develop a stronger commercial relationship between the SACCOs and a wider pool of consultants that have successfully offered their services to different types of financial institutions."

SACCO-Cap will assist SACCOs in developing clear business plans to meet prudential standards and work with them to contract appropriate service providers and consultants. The program will also provide formal training and certification to contracted service providers in order to ensure that the technical assistance provided to SACCOs is properly sustained.

Kenya-Pennsylvania Partnership Supports Project

Through its support and leadership, the Pennsylvania Credit Union Association has assisted World Council with advocating for the regulatory environment that gave rise to the SACCO-Cap project.

Rick Myxter, senior planning consultant with PCUA, participated in the association's first World Council International Partnership visit to Kenya in 2003. He said two main objectives that came out of the initial meeting were to develop SACCO management training and to facilitate a proper regulatory environment.

"In three years—though it seemed like things were moving slowly—a lot has been accomplished," said Myxter, who has been largely involved with developing an HIV/AIDS peer educator program with Mwalimu SACCO in Kenya. "In 2003, donors were pulling out of Kenya, and now there are several World Council projects there. They are seeing great improvement and recognizing that SACCOs will be major players in the development of Kenya. Regulation is the next thing that needs to happen."

PCUA hosted Patrick Khaemba, permanent secretary of the Kenya Ministry of Cooperative Development, earlier this year to learn firsthand about credit union regulation in the US.

In addition to the SACCO-Cap program, World Council's current programs in Kenya include the Credit Union Modernization Program, which will use funds from the sale of USDA wheat to support rural and agricultural economic growth in the face of the HIV/AIDS epidemic; a Credit Union Growth Program funded by the Gates Foundation to test product development tools for rapid credit union growth and provide outreach to the poor; IRnet^® Coop Kenya, which provides remittance services through Kenyan SACCOs; and an HIV/AIDS pilot peer educator program with Mwalimu Savings and Credit Co-Operative Societies SACCO, funded by USAID's Cooperative Development Program. The Strathmore-WOCCU African Management Institute is also training SACCO leaders to understand the need for regulation and uniformity and teaching them new technology.

World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 51,000 credit unions in 100 countries serve 196 million people. Learn more about World Council's impact around the world at www.woccu.org.