A recent report by SASRA has revealed that Sacco accounts holding more than Ksh1 million stood at 92,000 by the end of 2022.
This is a 29.6 per cent rise from about 71,000 accounts reported in 2021.
The 92,000 accounts, an equivalent of 0.63 per cent of all the 14.52 million accounts, held Ksh163.3 billion out of the total Ksh620.45 billion held by the 359 Saccos regulated by SASRA.
Accounts holding between Ksh300,000 and Ksh1 million were 414,000 in number, which had a total of Ksh212.38 billion.
“This analysis is thus a testament to the fact that the number of deposit accounts holding more than Ksh1 million grew at a faster rate of 29 per cent in 2022 than all other categories of deposit accounts,” said SASRA.
502,000 accounts held between Ksh100,000 and Ksh300,000, while accounts with between Ksh50,000 and Ksh100,000 were 349,000 and those below Ksh50,000 were 13.16 million.
This implies that 93.06 per cent of the 14.52 million accounts held up to Ksh100,000, leaving 6.94 per cent with deposits above Ksh100,000.
In sharp contrast, commercial banks had 64.02 million accounts holding deposits above Ksh100,000, which is 2.9 per cent.
The number of dormant accounts in deposit-taking (DT) and non-withdrawable deposit taking (NWDT) Saccos rose from 1.18 million to 1.22 million in the period under review. That also saw Kenyans cash out Ksh30.8 billion due to economic hardships.
“The harsh economic conditions such as high inflation and exchange rates meant that many Sacco members had their disposable incomes greatly reduced, and this resulted in low voluntary savings,” SASRA said.
SASRA now hopes the proposed changes to provide for a framework of appointing trustees to oversee a Deposit Guarantee Fund (DGF) to protect savers from losses related to their deposits will be passed.
The authority sees DGF as a critical infrastructural pillar which will boost the saving culture within the Sacco system by boosting confidence and trust among savers.
The Sacco Societies Act, passed in 2008, provides for the setting up of a deposit insurance fund for credit unions. The scheme, however, has never been established to date.
Section 55 of the Sacco Societies Act sets the premise for the establishment of a DGF to provide protection for members’ deposits of up to Ksh100,000, excluding shares, in the event that a society collapses as a result of liquidity or governance challenges.
Underwriting Sacco deposits will see credit unions join the league of banks and insurance firms, which have schemes to compensate depositors and policy holders in the event of the financial institutions’ collapse.
It will have a structure similar to Kenya Deposit Insurance Corporation that compensates savers in banks and deposit-taking micro-financiers for up to Ksh500,000 immediately a bank collapses, with the rest dependent on what is recovered later on.
By Sammy Chivanga
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