Over Sh5 billion Owed to Saccos by Employers in Non-Remittance, Report


By Our Reporter

Despite the stellar performance of the Deposit Taking (DT) Saccos during the troubled 2020 financial year, Sacco regulator SASRA blames perennial delays in remittances of statutory deductions for topping the list of un-warranted challenges that hamper the growth and development of the societies.

According to the SASRA’s 2020 Sacco supervisory annual report, the Sacco sub-sector is owed a sum of Sh5.04 billion by the employers of different employer based Saccos, which is an increase from the sum of Sh3.87 billion recorded during the year 2019; thereby calling for a re-think at the policy, legal and administrative structures aimed at addressing the problem.

The report also indicate that the sector also suffers low usage of ICT and other technologically enabled mobile devices in the provision of services, as well as short-term illiquidity needs resulting in delays by some DT-Saccos to make prompt refunds of members’ deposits as some of the teething problems facing the subsector.

“As the regulator, we are seriously concerned with the ever-increasing amounts of Non-remittances owed to Saccos. We are much concerned with the ever-growing amounts of non-remitted deductions which some employers continue to owe to DT-Saccos,” SASRA’s Chairman John Munuve, in the report.

The Chairman noted that Public Universities and Tertiary Colleges are the greatest culprits in failing to timely remit the deductions due to DT-Saccos which stood at Sh2.95 billion as at September 2020 compared to Sh2.86 billion as at September 2019.

Private sector companies and institutions owed the second highest amount of non-remitted deductions which increased to Sh0.85 billion as at September 2020 from Sh0.48 billion reportedly owed as at September 2019.

“Even the amounts of non-remitted funds owed by the national government ministries, agencies and constitutional commissions increased to Sh0.58 billion as at September 2020 compared to Sh0.037 billion over the same period in 2019,” said the Chairman.

Consequently, it is apparent that the policy and administrative initiatives undertaken by the national Government, the State Department for Co-operatives and the Regulatory Authority to reduce this menace of non-remittances are yet to bear fruit.

In this regard, the Authority calls for an overhaul of the existing legal framework for recovery of non-remitted funds owed to DT-Saccos, particularly from defaulting public entities which have proved to be perennial culprits.

It also entreaties the National Co-operative Policy Ministerial Implementation taskforce which was appointed in December, 2020 to overhaul the legal framework for recovery of such non-remitted funds owed to Saccos by various employer-institutions, including criminalizing intentional failure to remit such deductions.

On a positive note, DT Saccos recorded an aggregate asset base of Sh627.68 billion representing an annual increase of 12.5% and total deposits of Sh431.46 billion representing an annual increase of 13.41%.

The report unpacks the critical role played by DT-Saccos in deepening financial inclusion in the country, with a reported loan portfolio of Sh474.77 billion, constituting a yearly increase of 13.16%.

“The Report is a testament to the fact that DT-Saccos continues to be a critical source of access to credit facilities by many Kenyans, particularly the household economies as well as the SME’s. Indeed, statistics in the report reveals that in the aggregate, DT-Saccos were able to defy the disruptions caused in the national economy by the impact of Covid-19 pandemic and the associated restrictions,” commented SASRA’s acting Chief Executive Officer Peter Njuguna, while releasing the report on the performance of the DT Saccos.


During the year in review, the Authority licensed three new Saccos to undertake deposit taking Sacco business in Kenya.  The new licensees which commenced operations in 2020 included M/S Ushuru Sacco Society Ltd, M/S KIMISITU Sacco Society Ltd and M/S ACUMEN Sacco Society Ltd. This increased total number of DT-Saccos with deposit-taking licenses in Kenya to 175 DT-Saccos compared to 172 DT-Saccos back in 2019.

The Authority continued to maintain surveillance in the market to ensure that there was no violation of Section 23 of the Sacco Societies Act which prohibits any person from undertaking deposit taking Sacco business without a valid license issued by the Authority.

The total membership in the DT-Sacco system distributed among the 175 DT-Saccos was 5.47 Million individuals in 2020 compared to 4.5 Million reported in 2019. This increase in membership was primarily attributed to the increase in the number of licensed DT-Saccos by three in 2020.

Regrettably, a large proportion of the total membership within the DT-Sacco system accounting for 25.09% were reportedly inactive during the year 2020, implying that this portion of members had not made any transaction with their DT-Saccos for six or more months.

The majority membership of DT-Saccos were reported among the 49-Farmers based DT-Saccos which accounted for 41.93% of the total members while the 43-Teachers based DT-Saccos came second accounting for 22.91% of the total members.

Taken into consideration the total number of members reported by the 43-Teachers based DT-Saccos vis-à-vis the total number of people generally employed within the common bond of Teacher’s based DT-Saccos, it is apparent that the Teachers based DT-Saccos are among Saccos which have largely opened their common bonds and admitted persons who are not necessarily within the original common bond of the teaching and teaching related professionals.

Year 2020 also saw the Sacco Societies Fraud Investigation Unit (SSFIU) fully operationalized to combat financial frauds in the Sacco subsector following a Presidential directive in March. The Unit staffed by specialized personnel drawn from the Directorate of Criminal Investigations (DCI) are now in-charge of detection and investigation of criminal activities within the subsector, particularly those relating to embezzlement of members’ funds, cyber-related attacks, as well combating fraudulent schemes perpetrated by illegal entities posing as Saccos.

Regulations 2020

SASRA also developed Regulations 2020 which took effect from 1st January 2021, bringing on board the Authority’s supervisory framework which are three clusters of Non-WDT-Saccos. These are the Non-WDT-Saccos with non-withdrawable deposits above Sh100 million, the Diaspora based Non-WDT-Saccos and the Digital or Virtual based Non-WDT-Saccos.

“These categories of Non-WDT Saccos have for a very long time remained outside the supervision of the Sacco Societies Act because the necessary regulations had not been made,” said SASRA Chairman John Munuve.

However, with the publications of the Regulations 2020 and the appointment of their commencement date by the Cabinet Secretary Peter Munya, the Board reports that a substantial portion of the Saccos sector shall henceforth be brought under a standard prudential and market conduct framework

According to the Chairman, implementation of the Regulations 2020 will weed out the operations of the many fraudulent and pyramid-scheme-like entities, which have for long fleeced the public of their savings by falsely pretending to be Saccos.

In addition, compliance with the Regulations 2020 will ensure financial stability and soundness of Non-WDT Saccos, deepening confidence and trust in these Saccos as worthy financial institution for making saving by the public, just like their DT-Saccos counterparts.

“Indeed 2020 marked another important policy epoch in the supervisory and regulatory framework of the Saccos Subsector in Kenya,” Chairman concludes.

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