By Jackson Okoth
Only Savings and Credit Co-operative Societies licensed to take deposits from the public will be allowed to use the acronym Deposit Taking Sacco Society (DTS).
This is to differentiate them from other Saccos and to provide legal restrictions for the usage of this acronym by other non-deposit taking Saccos.
Presenting the 2016/17 Budget Statement to the National Assembly on 8th June, 2016,Cabinet Secretary for the National Treasury Henry K. Rotich, pointed out the confusion that has gripped the Sacco sector following the uncontrolled use of the name ‘Sacco’.
Under sharp focus has been the Matatu industry which has been accused of using the name while not adhering to the tenets of the co-operative movement, namely mobilizing deposits and lending to members.
“Mr. Speaker, with the increasing number of Saccos invariably using the name “Sacco” or “Sacco Society”, it has become difficult to know the differences between a Cooperative Society, a Sacco Society, Deposit Taking Sacco Society (DTS), and a non-depositing taking Sacco Society (non-DTS). The emergence and exponential growth of “Matatu or PSV Saccos” has further fuelled the confusion,” said Rotich, while highlighting the budget policy and revenue raising measures for the fiscal year 2016/17.
The National Treasury is proposing to amend the Sacco Society Act to provide that only Saccos that are licensed to carry out deposit-taking, can use the acronym Deposit Taking Sacco Society or DT-Sacco.
“The idea of protecting the name Sacco is long overdue so as to differentiate us from matatus as well as con artists who have been fleecing members of the public using this name. We are also going to be distinguished from traditional Saccos and microfinance institutions,” said Boniface Muthama, CEO of Wanandege Sacco Society Limited.
His sentiments are shared by most top executives in the Sacco industry who expressed the feeling that it is about time this confusion was brought to an end.
“We have cases of hooliganism in the Matatu Saccos with commuters who have no clue, directing their complaints to the Sacco Societies Regulatory Authority. This is why we need protection from these chaotic Saccos by regulating use of the name Deposit-Taking Saccos,” said Joseph Oganga, Chief Executive Officer, Kisumu Teachers Sacco Limited (KITE).
And in order to assist Saccos deal with serial defaulters and non-performing loans, Rotich intends to amend the Banking Act and the Sacco Societies Act to facilitate cross-border information sharing and to allow Saccos and utility companies to participate in the Credit Information Sharing (CIS) framework.
These changes are contained in the published Finance Bill 2016, Special Issue of the Kenya Gazette Supplement No. 86 (National Assembly Bills No. 19), dated 9th June 2016 and signed by Benjamin Langat, Chairperson, Parliamentary Committee on Finance, Planning and Trade.
According to this Bill, Section 31 of the Banking Act, Cap 488 is amended to include institutions licensed under the Sacco Societies Act, 2008, public utility companies and any other institution mandated to share credit information under any written law.
Treasury seeks to protect Saccos offering banking services
By Jackson Okoth