Safaricom Co-op expands into mining, energy and healthcare to diversify income

KENYA – Safaricom Investment Co-operative as set to spread its wings into energy, healthcare, property management and mining in their desire to try new opportunities that will ensure increased return on investments.

“We are increasing our portfolio to energy, ballast mining, health care and property management since returns on real estate is heavily impacted by access to credit and hence not as vibrant as it was in the past few years,” said Humphrey Njeru, the cooperative’s chief executive officer.

The co-operative, which is investing heavily in affordable housing space, says the 4,538 members will have the opportunity to gain more value from their investments.

Njeru states that this move is in line with President Uhuru Kenyatta’s vision of affordable housing as part of the Big Four Agenda.

According to The Standard, the co-operative processed 860 titles in 2019 and this year it expects to deliver at least 100 affordable housing units for sale.

“We have projected more revenue from the other revenue streams that we are moving into and we also expect a vibrant engagement with the Nairobi Securities Exchange under the Ibuka Programme so that members’ will have an opportunity to unlock their investment,” he said.

Njeru also pointed out that unlike loan-giving co-operatives, investment co-operatives operate differently but have potential to offer members more investment products.

He says investment co-operatives on the other hand exist to make the best returns from members’ money.

One of the challenges that investors in such co-operatives face is the difficulty in leaving despite ease of joining. Njeru explains that the co-operative is seeking ways in which members can easily offload their investments in case they want to access part of their investment in cash.

“Drawing from this experience, the Board and Management will develop a dividend policy with guidance from the NSE, the Ministry of Co-operatives and various consultants to have a standard for rebate, payouts and retention to operating and statutory reserves,” noted the co-operative’s chair Peter Gichangi.

SIC’s revenue declined to US$0.6m (KSh55.9 million) for the end of 2019 compared to US$5.25m (KSh525 million) in 2018, partly due to compliance with the IFRS 15 accounting standard which resulted in deferment of US$2.17m (KSh217 million) worth of income that will now be booked in the current fiscal year.

Under IFRS 15, the society recognises revenue only when land has been sold and transferred to the customer as opposed to the previous practice of booking sales after clients pay a deposit.

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