Senate On A Rescue Mission To Save Teachers’ Savings From The Sinking Spire Bank

Mwalimu SACCO’S Deaf ears Are Haunting Teachers six years later

Before closing the deal with the controversial businessman, Mwalimu sacco top officials were warned by several agencies.

The Co-operative Alliance of Kenya, an umbrella of more than 14 million members of the cooperative movement, was among the first agencies to flag the transaction on grounds that due process was not followed.

Later,  audit firm Ernst and Young, in a probe commissioned by Mwalimu Sacco itself ahead of the acquisition, also raised its own reservations on the deal. Shibutse and his team however had made up their minds.

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Senate On A Rescue Mission To Save Teachers’ Savings From The Sinking Spire Bank

On 31ST December, 2014, Merali smiled all the way to the bank after the sacco made the payment for his bank.

The deal has now come to haunt teachers, as the reality of what they paid for hits. Various attempts to find a buyer for the struggling lender have been in vain.

Borrowers have defaulted by a record 96 per cent, which means that nearly everyone who has borrowed from the bank has defaulted. Its latest financial results released last week show that its total non-performing loans rose to Sh2.4 billion, against net loans and advances to customers of Sh2.5 billion, having shrank from Sh3.3 billion. No bank in Kenya has sunk to this level of defaults.

After six years of losses, the bank did not have any money left to give to new borrowers. Insiders say it lent less than Sh90 million, the whole year, compared to more than Sh4 billion it lent in 2016.

Its balance sheet contracted by 25 per cent to Sh5.1 billion year-on-year, primarily due to loan attritions, maturities in government securities and accumulated losses. Its net loans and advances declined by 23 per cent, or Sh756 million, to Sh2.5 billion between 2019 and 2020.

The Tier Three bank has also been replacing its CEOs every year, in what has made the lender a graveyard of the careers for banking executives, who have to deal with immense turnaround pressure from teachers on one hand, and meet the stringent Central Bank regulations on the other hand.

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