When an organization chooses its name at formation, it becomes a central part of its identity and the name is usually positioned in the minds of its [key] stakeholders for the life of the entity. Usually, when choosing an organization’s name, focus is placed on certain attributes such as the products, services and operations or the geographical region or clientele served.
Given the dynamism in the business environment among other factors, the owners
of an organization may elect to change the name for various reasons:
- to create a “new image” of the organization or
- to better reflect the “business” focus.
Over
the past five years, there has been remarkable increase in the number of name
changes by Credit Unions (locally referred to as Savings & Credit
Cooperatives – SACCOs) in Kenya. This prompted me to perform a basic inquiry as
to whether these name changes have anything to do with a SACCO’s performance
and alas! The answer is YES, name changes by SACCOs, accompanied by appropriate
strategies, have had an impact on the [financial] performance of these SACCOs. The
diagram below provides a sneak preview into the prevalence of name changes in
Kenya, showing that name changes have increased from 6 in 2010 to 69 in 2015!
One
may ask: why the name changes? Based on a review of various documents discussing the name change by five randomly
selected SACCOs in Kenya denote diversification, growth and performance as key
factors which motivated the name change as illustrated in the following quotes
(names of the actual SACCOs have been withheld):
“The SACCO has officially
changed its name to “SACCO A LTD”. It has also changed its logo, colours and
the slogan. It is our hope that this change will also be in our hearts in order
to achieve the intended goals and objectives”. [In the chairman’s report of SACCO A]
“Our Sacco has changed its name to
reflect national coverage. We hope to attract more membership given our changed
name...” [In the chairman’s report of SACCO B]
“…delegates approved the
change of the society’s name so that it could have a national and international
outlook. This would attract other members to join the Sacco and improve
performance.” [In the minutes of the
annual delegates meeting of SACCO C]
“…we should rebrand the Sacco, give it
a new name and expand our area of operation. This will enable us to access new
business and have a regional and national presence”.
[In the minutes of the annual delegates meeting of SACCO D]
“…rebranding process: the
new name NEW SACCO E was identified and the same was advertised through the
Daily Nation. Rebranding was a process that was to continue with a view to
sustaining the Sacco’s growth”. [In the minutes of the
annual delegates meeting of SACCO E]
The
decision to change an organization’s name requires the involvement of key
stakeholders due to the considerable costs and potential risks that may arise. For
instance, when Nissan was selling cars in the United States under the name
Datsun, changing the name back to Nissan in the mid-1980s cost the firm between
US$ 30 million and US$ 100 million. Further, the decision by Andersen
Consulting to change its name to Accenture in 2001 cost the firm an estimated
US $ 100 million. The costs associated with name change relate to:
- lost clientele
- the time taken to rebuild the changed image.
Regulatory
requirements in changing a SACCO’s name in Kenya
According
to the Cooperatives Act, for a cooperative society to have its name changed,
the following procedure must be followed:
- a special meeting should be called and a special resolution passed;
- an application should be made to the commissioner and a written approval obtained on the name change;
- the new name should not resemble a name of a similar existing cooperative society;
- upon effecting the name change, the cooperative society must inform the commissioner who will delete the former name and insert the new name in the register;
- the new name is then published in the Kenya Gazette.
- The name change does not affect any of the society’s rights and obligations;
- The rights and duties of members remain unchanged;
- If there were any legal proceedings subsisting at the time of the name change, the proceedings will remain unaffected
It is important to note
that name changes may be ‘major’ or ‘minor’. A ‘major’ name change occurs
whereby the new name adopted is completely different from the old name. For
example, the change from “Baringo Farmers SACCO Ltd.” to “Skyline Ltd.” would
be regarded as a ‘major’ name change. “Minor” name change refer to those changes
where a minor adjustment to the original name (e.g. insertion of a word) is
made. For example, the change from “Mwalimu SACCO Ltd.” to “Mwalimu National
SACCO Ltd.” In the case of SACCOs that changed name between 2010 and 2015, over
90% of the name changes were ‘major’, denoting a strategy by these SACCOs to
widen their reach. It is also notable that over 94% of these SACCOs are also licensed
by the SACCO Societies Regulatory Authority (SASRA).
One would construe that
these SACCOs intend to compete with commercial banks and micro-finance institutions,
and this threat is real, given that the number of individual’s savings with
SACCOs in Kenya is higher, if the latest survey results by Financial Sector
Deepening Trust (FSDT) is anything to go by. According to the survey by
donor-funded FSDT Kenya, 22.3% of commercial bank accounts were dormant or
closed compared to 3.1% in SACCOs, 2.4 per cent in micro lenders and 1.2%for
mobile bank account.
