Kenya Union of Savings and Credit Co-operatives (KUSCCO), the umbrella body for Savings and Credit Cooperatives (SACCOs) in Kenya, has maintained that it doesn’t engage in any illegal business and operates within the stipulated laws that govern its operations.
In a letter dated October 12, 2023 sent to all Sacco Chairpersons and which was a reaction to the publication in the dailies on the same date regarding allegations that KUSCCO engages in illegal businesses, the Group’s Managing Director George Ototo reiterated that the allegations made in the publication, specifically the headlines, alleging illegality is meant to cause panic to the members and the public at large.
“This is to inform you that at the moment, other than a letter to asking us to cooperate with Sacco Society Regulatory Authority (SASRA) on regulations, there hasn’t been any investigations that would warrant such an alarming headline,” he added.
Ototo noted that KUSCCO is currently regulated under the Co-operative Societies Act Cap. 490 of the laws of Kenya and the related regulations and, guided by the By-Laws registered by the Ministry of Co-operatives & Micro, Small and Medium Enterprises (MSME) Development, which mandates it on all the businesses they undertake.
“KUSCCO has always prioritized compliance with the applicable Laws for the last 50 years of its operations. We reiterate our commitment to our members, partners, stakeholders and the public to address the issue at hand within the provisions of Law,” said Ototo.
He added: “We welcome any legitimate inquiries or investigations into our business practices to demonstrate our commitment to transparency and legality,”
KUSCCO’s response was prompted by a letter written by the Co-operatives and MSMEs Development Cabinet Secretary Simon Chelugui which was widely reported by the dailies alleging that the firm is facing investigation for allegedly engaging in illegal deposit-taking business.
“I note with concern that from available information and from your extensive correspondence with its management, KUSCCO Ltd appears to be carrying out and or undertaking regulated Sacco businesses without being licensed and or authorised to do so as required by the provisions of the Sacco societies Act No. 14 of 2008 and the regulations made thereunder,” said Chelugui’s letter addressed to SASRA CEO Peter Njuguna dated October 5, 2023.
According to Chelugui, the Cabinet Secretary is empowered, under Section 49 of the Sacco Societies Act 14 of 2008, to direct SASRA to conduct inspection of any Sacco society and of its books, accounts and records.
“Consequently, I hereby direct the authority to conduct an inspection of the said KUSCCO and its books, accounts and records in accordance with the requirements of the provisions of the Sacco Societies Act No.14 of 2008 as read together with the provisions of the Cooperative Societies Act as applied thereto by dint of Section 67 of Sacco Societies Act No. 14 of 2008,” he added.
The CS added: “Regulated Sacco business as prescribed by law entails either deposit-taking Sacco business which must be licensed or specified non-deposit taking business which must be authorized,”
The CS stated that the outcome of the findings will determine whether or not KUSCCO Ltd is undertaking regulated Sacco business in violation of the law.
“If so, determine the extent of the violation and recommend appropriate actions that may include sanctions on KUSCCO Ltd and its Directors and steps to bring it under the regulation of the SACCO Societies Act No. 14 of 2008 for purposes of compliance as well as for the protection of the public interest,” said Chelugui.
According to the 2022 SASRA annual supervisory report, which was released in August this year, the total deposits (savings) for Regulated SACCOs grew by 9.84 per cent to reach Ksh620.45 billion in 2022 compared to Ksh564.89 billion recorded in 2021.
These deposits were distributed as non-withdrawable (BOSA) amounting to Ksh515.65 billion (83.11 per cent), withdrawable savings (FOSA) amounting to Ksh83.78 billion (13.50 per cent) and fixed deposits savings amounting to Ksh21.02 billion.
SASRA noted that whereas the BOSA savings held by all the Regulated SACCOs increased from Ksh427.97 billion reported in 2021 to Ksh515.65 Billion in 2022, FOSA savings held by the deposit-taking SACCOs dropped from Ksh114.59 billion in 2021 to Ksh 83.78 billion in 2022.
By Roy Hezron
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