Giant matatu Sacco splits

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Kukena Sacco, one of the prominent players in matatu industry in Mt. Kenya has split over corruption allegations, bringing to an end one of the successful industry models that had organized members not only to have a better run matatu venture but also saved and loaned hundreds of millions of shillings. The split also threatens to trigger similar moves by other Saccos in the region, a development that may end up disrupting the industry and promoting fights among the rival Saccos.

Already, Kukena Sacco and the splinter group, Kukena Travelers Shuttle Limited, which has registered as a company rather than as a Sacco, are feuding because of allocation of space at Kerugoya Bust Park in Kirinyaga, the base of the original Kukena. The two are also threating to go to court over the use of the name Kukena with the mother Sacco saying the new entity must drop the name. According to the Managing Director of Kukena

Travelers Shuttle Limited Chomba Kaara, the split of Kukena Sacco started when information leaked that the management had misappropriated Sh58 million sometime in 2018. This led to the disbandment of the board that had Jackson Mbuthia as the chair, Alex Munyi as the secretary and Michael Kimaru as the treasurer. An interim board came into being chaired by David Muriithi, with Jason Maragwa as the secretary and Johnson Munyi as the treasurer.

Due to claims of misappropriation of Sacco money, the Commissioner for Cooperative Development authorized for an inquiry, as Kukena Sacco members had resolved during an AGM on December 6, 2018. The inquiry sought to investigate loan issuance and recoveries to Sacco members, acquisition of Sacco property, operations of petrol stations, among others.

The inquiry found out that the loaning process was full of irregularities and manipulation of society records. It also found that Sh40 million advanced to members as loans had not been paid back. It recommended that the loans defaulted must be recovered from the defaulters or the guarantors. It also recommended for strong internal controls to safeguard its assets and funds.

Kaara says that their appeal to the management to implement the recommendations were ignored leading to the split. But Kukena Sacco chairman David Muriithi accused the Kaara group of theft of members’ money and failing to pay their loans.

 “They complained that we are holding their vehicles yet they owe Kukena Sacco loans of above Sh1 million each. We required them as individuals to write to us and we are approving their exit provided they pay the loans,” he said. He said Kukena Sacco requires those with loans at the cooperative to clear them before their matatus are removed from the system.

“Some of the members who have left had stolen Sacco money which was unearthed by an auditor and they were surcharged. Some of them have paid back the money and those who haven’t will be prosecuted,” added Muriithi.

However, Kaara denied the accusations saying that members with loans who have left have shares whose value is even higher than the amount of loan they have and therefore the mother Sacco can recover the loans from the shares.

On claims that the leaving members owe Kukena Sacco, he said that such members had shares that far exceed the loans they were given. At its peak, Kukena Sacco, which was registered on February 19, 1997, as part of the matatu reforms known as Michuki Rules, had more than 500 vehicles in service, most owned by members and others by the Sacco itself. Other investments that the mother Sacco has include petrol stations, tyre shops, parcel services among others. Kukena Travelers Shuttle meanwhile has managed to pull in about 68 members of the mother Sacco.

One of its directors, Cyrus Kabui, says the new matatu company is reaching out to youths who own Probox and Sientas and who are upgrading to matatus to join them as they will not be required to provide goodwill as it happens in other Saccos.

Growing disputes

Notably, such disputes have of late been commonplace in the Mt Kenya region where more players are joining the matatu industry leading to congestions and rivalries in bus parks. Mt Kenya Matatu Operators Secretary Abraham Gichovi expressed concern that congestion at bus parks may lead to protracted rows and called on county governments to involve all players in finding amicable solutions. For instance, Kukena Sacco is aggrieved that the latest entrant in the regional transportation sector is using their name, something they consider an affront and unfair business practise. Also, the two entities are engaged in a tussle over parking spaces with Kukena Sacco accusing KT Shuttle of trespassing into their traditional slots.

This dispute spiralled into an ugly exchange of words and later kicks and punches at the Kerugoya Bus Park on January 2 this year as the crew from each Sacco faced one another. As chaos erupted, riot police arrived and hurled teargas canisters at the two rivals, sending them fleeing in different directions. The fight paralysed transportation in the busy park, which was busier as people travelled back to work from holiday. They were forced to hire taxis and those travelling shorter distances to trek. Kukena Sacco management accuses the County Government of Kirinyaga and the police of bias in handling the dispute by allowing the rival Kukena Travelers Shuttle to operate from their “hole”. 

Kukena claims space was reserved for their Thika bound matatus and their customers identify them with it. Kukena Sacco managing director David Muriithi reiterated that they will not move from the contested parking bay and called on the County Government of Kirinyaga to allocate an alternate space to the rival Sacco.

 “They (KT Shuttle) claim they were allocated our space. They installed their office at night under the supervision of enforcement officers and the police. The following morning, they were demanding that we vacate our matatus from the space. We refuse to leave as we believe that is our rightful allocated bay,” said Muriithi.Conversely, KT Shuttle management accused Kukena Sacco of trying to control all routes in the region. Kaara insists the parking bay is theirs as it was properly allocated to them by the county government and they are not ready to cede it to any other operator.

 “We have moved to the County Governments of Nakuru, Nairobi City, Kirinyaga and Embu and have been legalised to operate on our allocated parking spaces. Nowhere else have we faced opposition apart from Kirinyaga County by our mother Sacco,” said Chomba. On the name “Kukena”, Chomba points out that they were licenced and authorised by the National Transport and Safety Authority (NTSA) to operate using that name and any operator unhappy with that should complain to the authority and not to them. 

2NK Sacco Chairman James Kahiru weighed into the matter advising that at a time when the sector grapples with the intrusion of unauthorised small cars acting as PSVs, Saccos should be growing not splitting.

 “When a Sacco is bigger it is able to help members by availing loans and other services than when it splits into two. A bigger Sacco is able to provide better services to its members than many smaller outfits fighting one another,” he cautioned. 

Kahiru said whereas it is clear Proboxes are authorised as taxis but continue to illegally operate as PSVs, a solution is possible through enforcement by the government. “The government has the machinery to implement the law. A matatu is required to have a PSV licence, a TLB, speed governors, among other requirements that the small cars don’t have. Those cars should not be allowed to operate as PSVs,” he said.

SOURCE: standardmedia.co.ke


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