The Cooperatives Bill, which is about to become law has put errant employers sitting on huge sums of cash in the form of remittance deductions meant for SACCOs, now estimated at Ksh 3.5 billion at unease state.
The Cooperative Bill 2024, published as the National Assembly Bill No. 7 of 2024 on 9th February 2024, has provisions that has expanded the mandate of the cooperatives court or tribunal. Should the Bill receive Presidential Assent, SACCOs affected by the unremitted dues menace will be able lodge a claim suit against the employers, before the Tribunal.
The new law allows a Cooperative to sue the employer for non-remitted deductions arising from an agreement between the Cooperative and the employer on remittance deductions.
At present, despite threats by authorities issued to errant employers withholding monthly SACCO dues, these Societies have continued with the malpractice, unabated as the regulator watches helplessly.
According to figures from SASRA’s latest Annual Bulletin, County Governments and Assemblies are ranked as the biggest defaulters, owing SACCOs some Ksh 1.69 billion.
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Public Universities and Tertiary Colleges are second with Ksh 762,272,603.00, Private sector companies withholding Ks h 433,872,981.00, State Corporations Ksh 164,762,018.00 and public sector companies sitting on unremitted SACCO dues amounting to Ksh 265,765,352.00.
Other defaulters are National Government Ministries (Ksh 129.7m) Constitutional Bodies (Ksh 6.8m, Churches and Church-based Institutions (Ksh 18.3m), Public Schools’
Employees (BOM) Ksh 16.9m Private Universities Ksh 5.9m, Cooperative Entities Ksh 37.5m and Private Sector Schools Ksh 14.6m.
This SACCO dues non-remittance crisis is affecting some 49,891 members from Deposit-Taking SACCOs and 5781 members from Non-Withdrawable Deposit-Taking SACCOs
Apart from exposing members of affected SACCOs to loan defaults and adverse listing by credit reference bureaus, affected SACCOs are also experiencing liquidity challenges and are unable to meet their obligations to members.
Latest Data from SASRA shows that employers are still sitting on huge amounts of unremitted cash-mostly meant to repay loans and other credit facilities issued to SACCO members.
During the period ended December 2024, total unremitted cash owed to SACCOs by employers increased sharply to Ksh 3.49 billion compared to Ksh 2.59 billion in 2023.
Given that the bulk of the non-remitted funds were owed by the government and government owned institutions, the Authority continues to call for policy reforms to allow the recovery of such sums directly from their exchequer grants at the National Treasury.
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SACCOs are also being urged to persuade their members to move their salary accounts to their FOSA instead of rather than reliance on the employer institutions to remit the deductions
The fact that the bulk of the non-remitted funds amounting to Ksh 3.10 billion (74.50% of the total non-remitted funds) were meant to repay loan and credit facilities issued to the affected SACCO members means that these loan and credit facilities remain largely defaulted.
Affected SACCOs, according to SASRA, face liquidity challenges, undermining their ability to meet financial obligations to SACCO members.
The proposed law states that an employer has a maximum of one week to remit the deductions. Failure to do so will attract a fine of the sum deducted together with an interest of not less than 5% per month.
The Commissioner for Cooperatives can also appoint a person, bank or institution to be an agent of the affected cooperative for purposes of collecting the unremitted dues. The agent has a window of 30 days to make the collection.
At present, the problem of dealing with employers who fail to remit Sacco remains a grey area that even the Commissioner’s office or SASRA has their hands tied as the employer is also the agent of the SACCO and therefore not under any regulatory supervision.
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“What the regulator has been doing is encouraging affected SACCOs to work closely with employers to understand why there is a delay in remittances. In the case of country governments and assemblies, the excuse has always been that the national government has delayed in disbursing funds to the country government, “said Peter Njuguna, the then SASRA CEO in an interview.
While section 35 of the co-operatives act, stipulates punitive measures that can be taken against employers who fail or delay in remitting Sacco dues, these provisions are said to be weak and unenforceable by the Commissioner for Co-operatives, who is accused of being less effective.
The employer has a contract with the SACCO, an arrangement that does not involve the regulator. The powers to take action on culprits who fail to remit Sacco dues lies in the office of commissioner of co-operatives development, who also lacks the legal muscle.
Now any aggrieved SACCO or member can lodge a claim with the Cooperatives Tribunal, without SASRA or the Commissioner.
By Jackson Okoth
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