Revival Church SACCOS Ltd was registered on 25th January 2002 to carry out SACCO activities in Tanzania. It is a member based organization owned by church members of Tanzania Assemblies of God. Currently the SACCOS have one head office and 25 branches in Tanzania Mainland.
Case study Revival Church SACCO
Most of these branches are found at district headquarters and some at regional level. By the end of April 2013, The Revival Church SACCO had 52 staff who manages the operation at the head office and its branches.
The SACCO serves over 5000 members. It has a loan capital of over Tzs. 2.5 billion and has mobilized over Tzs.2.2 billion in savings. The SACCO became an Oikocredit partner in 2009.
Most SACCOs in East Africa face risks. Sometime most of them are not even aware of all the risks they face. Revival Sacco was one of the Sacco that was selected by Tanzania office to be supported in Risk Management. Risk Management has been important intervention by Oikocredit Capacity Building unit. The reason for this type of intervention is twofold.
One, the SACCO will be able to identify all the risks it faces and mitigates those risks in order of priorities. The other reason for supporting this type of intervention is that an institution that manages its risk well will be a good partner for Oikocredit in terms meeting its loan obligation and serving its end clients.
Revival was selected because it had bigger membership and the members were spread out throughout the country through a network of 25 branches. These branches are not network and sometime they have one or two people serving them which is a risk.
Previously Oikocredit had trained 2 consultants in Tanzania on Integrated Risk Management approach and had hired Hans (a Dutch national) to mentor these consultants as they support partners on this intervention. The approach employed is that One Consultant supported revival church in identification of risks and supported them to come up with risks scorecard.
Once this was done the consultant facilitated the organization in risks selection and measurement. What followed was prioritization process on which risks to start working on. Revival church was then taken through the assessment of current control measures effectiveness. Where current control measures were found to be ineffective, new measures were proposed together with work plan.
The last stage was appointment of risk management committee and the training of the same. The consultant consulted Hans from time to time in areas that were difficulty for him.
Allocation of funds
Oikocredit funds were disbursed directly to the consultant to carry out the above activities. Contribution from partner was utilized to pay the logistical cost of the assessment workshop.
One major lesson learnt is that there is always some follow-up capacity building issues after these interventions. The risks identified in the score card may require different mitigation measures that the organization may not be able to deal with on its own. It is important to keep this in mind even when budgeting for this type of interventions.
The other lesson learnt is that it will be important to continue to mentor the organization for at least a period of one year. For example Revival identified 19 risks in its scorecard. It may not be possible to work on all these risks for period of six months as earlier thought.
"Before the Risk Management interventions our staff and the board were not aware of the risks we were facing. Sometime our staff could wait for a time before following up on loans in arrears. Our process of approving loans was not water tight. This has changed since we had this intervention” - George, the manager of Revival Church SACCO during a recent interview.
This intervention has achieved a number of successes for this organization:
- The first major achievement is improvement of the "portfolio at risk" - the part of borrowers at risk of defaulting on their loans. Before this intervention, the PAR was getting worse and worse. The organization identified new control measures to keep this in check. One of the measures identified was closer follow up of loans in arrears. The other was separation of department of follow-up of loans in areas from credit. The results have been improvement of PAR from as high as 21% to about 14% currently.
- The other major achievement is that the SACCO is now aware of all the risks it faces. The SACCO has a risk management committee in place that keeps looking at how the risks are being dealt with including checking on control measures. The committee has proposed a number of changes in some policies and by-laws which will be submitted to upcoming AGM for approval.