Poor planning haunts welfare group members in old age

 

Rura Welfare Association secretary Francis Mwangi. Photo/BERNADINE MUTANU  NATION MEDIA GROUP

By BERNARDINE MUTANU bmutanu@ke.nationmedia.com
Posted  Thursday, December 20  2012 at  02:00

In Summary

• Determined to set up a source of revenue, a group of retirees saves and applies for a loan only for banks to turn down their application — a bitter pill that reminds them of the chance they missed to prepare for their retirement when they were still working. At their age, the road is too bumpy to start an investment venture

When a group of retirees in Nyeri County came together to form an investment club about 20 years ago, their dream was out of this world.

“We wanted to build a ‘Hilton’ but we later realised we could not because we lacked enough capital to do so,” Mr Francis Mwangi told Money.

Mr Mwangi is the secretary of a group of elderly citizens from Karigaini village in Nyeri County who dropped their investment ambition because they not only had inadequate capital, but could not qualify for credit from commercial banks to roll out their project.

The Rura Welfare Association, whose 15 members are all retired civil servants above the age of 65, was started in 1992 with the primary objective of bringing friends together.

Probably buoyed by their numbers, the group transformed itself into an investment outfit three years later.

“We spotted a piece of land in Nanyuki and wanted to buy it to start a company. However, we faced numerous challenges, especially in registering the company and decided to shelve our ambition,” says Mr Mwangi.

or eight years, the members made a monthly contribution of Sh300 each towards their goal. The money was saved in a joint account.

By 2000, they had saved only Sh73,183, which was not enough to buy the land that cost Sh200,000.

Another complication was that the ownership of the plot, on which they planned to construct houses and commercial buildings, was mired in controversy.

“We proposed that the money we had in the account be shared according to contribution since it could not even buy the piece of land we wanted, let alone enable us to put up the buildings,” said Mr Mwangi.

This decision was reached after the group’s efforts to get loans from commercial banks failed.

The group sought professional advice and was told that it was the wrong time to think about investing since the plan was likely to get complicated and that the members were unlikely to live long enough to enjoy the fruits of their work.

“Some members felt that we were entering into a complicated venture. They said it was not good to get into debt at our age,” Mr Mwangi said.

Although the group had good goals, it lacked the drivers to achieve them. This was partly because the members were retirees without a steady source of income apart from their pension, which was too little to start an investment of the size they envisioned. They could also not qualify for financial assistance from banks.

Disappointing experience

Secondly, the group was small and had no collateral to enable it to access loans.

“Our group was small and was made of retirees who did not have any form of income to qualify for a loan.

Credit lenders said it was a self-help group, not an investment club,” says Mr Mwangi.

“It was sad because the money we had was not enough and we could not secure any financial assistance. We just had to forget about the idea altogether,” said Mr Peter Ngugi, a member.

Following his disappointing experience, Mr Mwangi advises: “If you did not manage to buy land or any form of property while working, do not do it with your pension. Not unless you have a business venture that is bringing in money after your retirement.”

He says the pension is too little to enable one to make any form of meaningful investment. The group members regret not having invested when they were younger.

“If you put your pension money into an investment project, you are likely to fail because it is too little to complete it. You will end up stressed and will not enjoy your retirement. You may even die due to stress,” says Mr Ngugi.

The retirees now realise that it was a mistake to commit their only source of income to a venture which they were not sure of.

“When we calculated the advantages and the disadvantages, we found that it could not work. We would just be left helpless. There was no need to continue the venture,” said Mr Ngugi.

“Retirement age is not the time to pay dowry or marry. If you never went to your dream destination, just forget about it,” jokes Mr Ngugi.

The retirees acknowledge that they did not prepare well for their retirement.

“People in this country are not taught to prepare for retirement. This should be part of our education curriculum,” suggests Mr Mwangi.

However, the group has not allowed the disappointing experience to discourage members, who meet every first Sunday of the month to socialise and contribute towards each other’s welfare.

Cushion beneficiaries

Some members contribute Sh1,000 to the welfare fund while others contribute Sh1,400, depending on whether they are couples or not.

At the end of the gathering, the host family gets about Sh17,000 to cater for food and drinks. The balance is meant to cushion the beneficiaries.

“Not everything that appears economically viable is worth trying. One should evaluate the pros and cons before making a key decision,” says Mr Ngugi.

He adds that the group has filled a gap in the lives of the old people as many are neglected.