How Saccos umbrella body will be a liquidity game-changer for sector


The operationalization of the Kenya Sacco Central Liquidity and Shared Services Cooperative Society Ltd (The Sacco Central) is set to change Kenya’s Sacco sub-sector’s landscape as it will help address liquidity challenges, especially for small Saccos.

Under the outfit, Saccos are expected to pool resources under one platform and access a host of services at cheaper rates.

The Sacco Central, which was registered in June 21, 2020 by the Cooperative Commissioner David Obonyo, seeks to operationalize the Deposit Guarantee Fund, Central Liquidity Facility, and shared services.

The Deposit Guarantee Fund (DGF) is a safety net that seeks to compensate Sacco members with savings of up to Ksh100,000 in case a Sacco collapses.

On the other hand, the Central Liquidity Fund (CLF) aims at creating a national payment system and promote inter-lending among Saccos.

SASRA chairman George Murage said a lot of players are excited about investing in a pool since the sub-sector will be stronger in unity.

“I am very passionate about a member who is at the bottom of the pyramid. Though the end has not come, it is a continuous process as we grow in the Sacco sub-sector,” he said.

Murage said member Saccos will access a standard provider Management Information System (MIS) by connecting Saccos to the National Payment System (NPS).

More than 50 Saccos have joined the Cooperative in a move that seeks to enhance their operations at lower costs.

Sacco players have been pushing for the establishment of the CLF and Shared Services.

During last year’s Ushirika Day celebrations, former President Uhuru Kenyatta stated that the policy and legal framework for the Sacco CLF and shared technology services received Cabinet approval in May 2022.

SASRA CEO Peter Njuguna said it is always a nightmare if a large Sacco is in trouble due to lack of tools to deal with it.

“The solution in law is to liquidate but before you get to liquidation, there are a number of steps to take and you need the tools to deal with them,” he said.

Njuguna said that some of these tools they are dealing with, such as the shared services, are part of the race towards building a stronger Sacco industry.

“The conceptual framework for us to get to that future is to get a way of integrating ourselves by keeping our identity,” he said, citing commercial banks as a case study for Saccos to borrow from.

He lauded the government support for the Sacco industry, saying there is the need to have efficient infrastructure in place to guard members’ investments.

“Because of the structure of the market, the ways of mobilizing deposits are inefficient and safety needs to be reinforced by other regulatory tools,” he said.

Njuguna said this is the reason there is talk of a system approach to managing liquidity through the various regulatory frameworks initiated by the government such as the DGF and CLF.

“You will not have an effective deposit insurance without addressing the legal structures as we need to have the solution,” he said.

He remained optimistic that establishing the Sacco Central will reflect not only their understanding of the challenges facing the sub-sector ten years on, but also create conversations around the creation and registration of the Cooperative to address some of the bottlenecks.

The Society’s interim chairman Evans Kibagendi said they got the idea from SASRA and its CEO, having a vast global experience.

He stated that working on the platform was enhanced by the operational and technical working groups.

While big Saccos have the financial muscle to invest in these platforms, it is not the case with small Saccos, hence the need for a shared services platform.

A number of Saccos face a challenge in investing in digital finance platforms such as mobile banking, which has been identified as a key enabler of growth.

Due to financial and technical challenges, small Saccos might not meet these expectations and will struggle to match the big players whose investments are immense.

By staff reporter

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