Cabinet Secretary for Co-operative and MSMEs, Wycliffe Oparanya has declared a suspension on new registrations and banned the use of loans to pay dividends to Sacco members.
Speaking during the 34th Special General Meeting of Unaitas Sacco in Nairobi, CS Oparanya said the move is part of a stringent crackdown on poorly managed savings and credit co-operatives (Saccos), to curb “unhealthy financial competition” and protect millions of depositors in a sector that holds over Ksh1.08 trillion in assets.
“I have already directed the Commissioner and SASRA to ensure that no Sacco pays dividends or interest, unless they have made sufficient surplus, met the capital adequacy requirements, and made provisions for statutory reserves,” CS Oparanya said
He added that no Sacco shall be allowed to borrow from external sources to pay dividends, warning that that any Sacco intending to procure an external loan must now obtain written approval from the Commissioner.
The crackdown extends to governance, with Oparanya targeting the calibre of elected officials and the integrity of financial audits.
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He expressed grave concern that some Saccos are engaged in “cooking of books” while auditors “look the other way.”
“I am directing the Commissioner and SASRA to rein in both internal and external auditors who fail to secure correct and accurate financial reporting,” he stated, adding that negligent auditors would be referred to the professional body for sanctions.
Furthermore, the Ministry has issued “a temporary moratorium on the registration of new Saccos, to take stock of the sector’s health, with inactive entities facing deregistration and liquidation.
The CS hailed Unaitas growth from humble beginnings.
“Unaitas SACCO stands as a shining example: I am aware that the Society had a humble beginning, having been registered in 1993 by tea farmers in Murang’a under the name Murang’s Tea Growers SACCO,” he said.
“It rebranded to Muramati before rebranding to the current name. Unaitas is now a Tier 1 SACCO with a national footprint. Currently, its services extend beyond tea farmers to serve small and medium-sized enterprises (SMEs), salaried employees, and individuals.”
By Juma Ndigo
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