CHAIRPERSON S REPORT TO THE MEMBERS OF UN SACCO SOCIETY LTD, DURING THE 32ND ANNUAL GENERAL MEETING ON 14 TH MARCH, 2008

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1 CHAIRPERSON S REPORT TO THE MEMBERS OF UN SACCO SOCIETY LTD, DURING THE 32ND ANNUAL GENERAL MEETING ON 14 TH MARCH, 2008 The Provincial Co-operative Officer invited Guests, my fellow Co-operators, Ladies and Gentlemen, good afternoon. Iam pleased and privileged to present to you the financial results of the Society for the period ended 31 st December, 2007.Overall the Society s performance was above expectations and we were able to record the highest earnings in the UNSACCO s history.it also gives me a lot of pride to inform you that our organization has not only become the most profitable in the country but it is also declaringa high dividend rate of 18% for the year Operatingenvironment The economy sustained the growth momentum of year 2006, on the backof increased activity in the agriculture and improved infrastructure buoyed by the ongoingrehabilitation of the road network.economic indicators showed positive signs with an improved GDP growth of 7.1% in the second quarter of 2007from 5.8% in the previous year.the overall inflation rate rose to 15.9% in December owingto increased fuel and food prices.the year saw significant stability in interest rates with the benchmark91day Treasury bill rate averagingbetween 5.7% in January and 7% as at December Performance of UN SACCO. Given the favorable macro-economic conditions, the financial Sector remained stable.it is in this environment that the results of the UN SACCO up to 31 st December, 2007show continued growth in all parameters coupled with improved efficiency.iam pleased to report that the Society recorded an overall increase in turnover of 35% from Kshs.305.9million in 2006to Kshs.413.2million. Duringthe year under review, mobilisation and lendingof resources was as vibrant as ever.the members deposits rose by 17.6% to stand at Kshs.2.068billion up from Kshs.1.759billion in the year 2006.On the other hand loans to members balance rose from Kshs.1.87 billion in the year 2006 to Kshs.2.4 billion which accounts for an increase of 28.3%. SocietyAchievements Iam also pleased to report to you that for the 11 th year in a row, your Society was commended and rewarded with ten coveted trophies for excelling in various competitive slots, which included highestdividend, lowestexpenditure, bestloan servicesand bestmanagement

2 practices within its category of Saccos nationally, as well as in the overall SACCO subsector in the country. I wish to assure you that your Society's Management Committee will not relax as a result of these successes;instead these good results only help to motivate us to even greater achievements in the future. Needless to say the Committee will continue to rely on your full support through suggestions and constructive criticism. Appropriation of the Net Surplus W e are pleased to recommend to you for your consideration, a declaration of interest on members'deposits at the rate of 18% for the year ended December 31, 2007, the highest in the history of the UN SACCO, up from 15% in the previous year. A total of Kshs.346 million will be distributed to the members out of which 17% will be paid in cash while the remaining 1% will be credited to the member s deposits. However, members are of course at liberty to declare a lower rate. At this point, let me also caution that such a high rate of interest on your deposits may increasingly become difficult for the Society to sustain in an environment of declining yield on Treasury bills/bonds, one of our main investment destinations. The Future Strategic Plans To survive in the coming years, our Society will need to continue exploring the potential of expanding its operations by seeking and introducing new and innovative products and services in order to broaden its revenue base and also improve service delivery to its membership. It is in recognition of this fact that the Management Committee has continued to seek partnerships with friendly organizations in order to bring on board new products. In this regard, I am happy to announce that your Management Committee in partnership with Housing Finance has launched a long term mortgage facility which is expected to help members seeking long term financing for purposes of acquiring shelter. The interest rate for this facility is 12.5% and it will remain fixed for the first three years after which it will be reviewed depending on the market conditions. The Housing finance has also waived the commitment fee of 1% for UNSACCO members. The Management Committee has also launched the M-pesa service in partnership with Safaricom Ltd. for purposes of bringing services closer to the members and also raise some revenue. In order to further improve our services, the Management Committee has 2

3 appointed M/s Delloite and Touche as the Society Internal Auditors. In addition to their audit duties, Delloite will be tasked to help in carrying out a comprehensive review of the Society operations and develop an action plan. The terms of reference of the review comprises; review of business process, management information systems, human resources, accounting and internal control procedures. The Management Committee has also put in motion a process that will facilitate the Society s Strategic planning process sometimes in April this year. Once formulated, the strategic plan will be implemented in phases over a five-year period. Members will be consulted at the appropriate time to give their input for the success of the entire process. Loan Protection Insurance The Management Committee implemented the loan protection Scheme through Cooperative Insurance Company since April 2006 and the scheme has worked well. The annual premiums are expected to vary based on the level of our loan portfolio and they will continue to be financed by the insurance subscriptions of Kshs.300 p.m which was approved during the previous Annual General Meeting and which the Management Committee intends to implement with effect from 1 st April This arrangement will ensure that the Society is adequately covered at any level of lending and also ensure sustained profitability. Reengineering of the Society s operations In this year s budget a proposal has been put forward for the Software upgrade and installation of ATM. A further proposal has also been made to take the Society to the next level next year by introducing internet banking. It is envisaged that with proposed measures which includes Computer software upgrade and introduction of internet banking, backed by our website our members will be able to transact business on line with their Society in the foreseeable future and this will help enhance efficiency in service delivery. During the last four years the Society has made a lot of improvement on the UNSACCO website whose address is; I believe all of us are reaping benefits from this initiative, having been able to access all the information relating to the AGM for the last four years through the homepage. I would like to urge our members to visit out website regularly in order to catch up with the latest developments in the UN SACCO and also make suggestions for further improvements. We wish to thank you all for your support in this regard. 3

4 I wish to say a few words concerning our staff, your employees. Many of you have been around for sometime and have had occasion to interact with our staff. I hope that I am speaking for all of you when I say that they have done an excellent job under very difficult and demanding circumstances. Please join me in congratulating them for a job well done. My Committee is aware that improvement is required in the area of customer relations and training of the staff is continuing to bring out the best in them. The Management Committee has also put in motion the mechanism to recruit a full time customer care person in order to improve service delivery to the membership. I am very grateful for the support and understanding that my Committee and the staff have received from the entire membership in steering our Society thus far. By the grace of God, I am confident that our co-operators will continue to support the Management Committee in various activities and the challenges of the new century. Remittances by UN Organizations The Management Committee has noted with regret that some UN Agencies submit their monthly remittances late. This means that your loan repayments and share contributions are not credited to your accounts on time. This means that you lose on your dividends at the end of the year and your loan accrues interest for the period your repayment remains outstanding. It would be appreciated if remittances are received by 25 of the month; at the same time your salaries are paid to avoid these losses. Election of the Management and the Supervisory Committee Following the enactment of the new Co-operative Societies Act, the Management Committee is expected to serve two terms of three years each while one Supervisory Committee member is required to retire annually on rotational basis. The current Management Committee was elected in the year 2004 and therefore they are today seeking fresh mandate in order to complete their final term of three years in office. These are: Martin Okun, Gabriel Wanga, Washington Wanjau and Mary Oyugi. All the four members are eligible for re-election and are offering their candidatures along with new nominees for your consideration. Today s AGM is also expected to fill three vacancies left by Mrs. Mary Githiomi, the Chairperson, 4

5 Mr. Paul Okwaro and Pauline Nderi who do not wish to seek re-election and Mr. Moses Wasike, the Vice-Chairperson who has relocated to Washington D.C. In the Supervisory Committee, one member, Mr. Stephen Ndeti is retiring by rotation and you are to fill this vacancy. Mr. Ndeti has expressed his willingness to continue in office. Let me say something about Moses Wasike who served as the Vice-chairperson of the Management Committee. Though Moses is not physically in Nairobi, we in the Management Committee have tremendously benefited from his invaluable contribution and support in our Committee deliberations. I hope that he will have the opportunity to support the future Management Committee. I also wish to appreciate the dedication and commitment demonstrated by Mr. Paul Okwaro in his long service to the Society. I am sure Paul s sense of humour shall be missed immensely by my colleagues who will remain in the Committee. Appreciation I would like to record my sincere gratitude to you all in your respective capacities (as our customers/shareholders/members; Management and Supervisory Committee members and Staff) for the support, understanding, enthusiasm, confidence, drive and hard work as well as your individual and collective contribution towards the attainment of the remarkable growth and performance of the Society. I also wish to recognise and appreciate the role of other UN SACCO supporters and friends in the business, i.e. the Ministry of Co-operative Development, KUSCCO; the Auditors - M/s. Githongo & Company and Deloitte & Touch; our Bankers, the Kenya Commercial Bank Ltd, Citibank Bank Ltd and Co-operative Bank of Kenya Ltd, our Legal Advisors M/s. Ombonya & Company Advocates and several others who may not be with us here today. I was co-opted into the Management Committee more than 20 years ago and immediately became the Secretary. I have risen from the position of Secretary to Vice-Chairperson and finally to Chairperson. Those of you who were members of the UNSACCO in the early 80s know that it had collapsed and it took a lot of work of the then CMC, headed by Ms. Teresa Muigai, to resuscitate it. I have watched this society grow to the current status and I thank God for He has helped us. Those who build a house without God build in vain and those who watch 5

6 over a city without God watch in vain. Finally, I wish to thank you all for the confidence you have shown in my leadership over the years and wish to assure you that I am leaving the UNSACCO in the hands of intelligent, energetic and young men and women who are capable of pushing this Society to greater heights of growth. I wish you God s blessings during 2008 and for ever more as you celebrate the Easter holidays. Mary Githiomi CHAIRPERSON 6