Small-sized SACCOs to merge to enhance oversight, stability; CS Oparanya reveals

Small-sized Saccos with deposits of below Ksh 100 Million will be merged with the larger ones, this is in line with the Ministry of Co-operatives guidelines which aim to tighten supervision of thousands of co-operatives spread across the country with thin capital and deposit bases.

Speaking during the Sacco Supervision Annual Report 2024, Co-operatives Cabinet Secretary Wycliffe Oparanya said many of the small Back Office Service Activity (Bosa)-only Saccos are either inactive or unstable because they serve just a few members, with “limited impact” on financial inclusion.

In Bosa-only Saccos, members’ funds go into purchase of shares and the institutions give loans. The share capital contributions cannot be withdrawn but can be transferred to another member at the point of exiting.

“A time has come for the Sacco sector to explore market-driven solutions of consolidations and mergers of these very many small Bosa-only Saccos. This is the only way to ensure their financial viability and stability,” said Oparanya

“I urge officials of Saccos operating within the same or similar traditional economic and social common bonds to immediately start conversations relating to mergers as a solution to their survival.”

ALSO READ:

 Mwalimu National SACCO boss clinches SACCO CEO of the year award

The report showed out of the 177 deposit-taking (DT) and 178 non-withdrawable deposit taking (NWDT) Saccos under the watch of Sacco Societies Regulatory Authority (Sasra), just 40 held 65.83 percent of the Ksh749.43 billion deposits.

Oparanya said the sector should now model from the recent development where Sasra oversaw the merger of a small Sacco in Kirinyaga County with a larger one. The merger gave members of the smaller Sacco access to an expanded offering of financial services.
Mergers will help the government in tightening oversight even as it eyes bringing all co-operatives under the supervision of Sasra.” He said

Currently, Sasra oversees all DT and NW-DT Saccos that hold at least Ksh100 million deposits. This has left many co-operatives in the hands of the Commissioner of Co-operatives where the oversight is relaxed.

“Governance in Saccos is still a matter of grave concern for the government,mergers will help in tightening oversight even as it eyes bringing all co-operatives under the supervision of Sasra.” Said CS Oparanya.

By Juma Ndigo

Sharing is caring!