By Malachi Motano
The Savings and credit cooperative societies (Sacco) sub-sector defied the economic challenges recorded in the troubled 2020 financial year to record a growth of 14 per cent in assets during quarter three compared to the same period previously.
According to the Sacco Societies Regulatory Authority (Sasra) chairman John Munuve, the sector’s assets in the review period stood at Sh622 billion compared to Sh525 billion in corresponding period of 2019.
The gross loans stood at Sh448.59 billion at the end of September 2020, compared to Sh400 billion during a similar period in 2019, a growth of 12.2 per cent.
Speaking at the CEOs national forum under the auspices of KUSCCO held in Isiolo town recently, the chairman is grateful that despite the many challenges that were realised in the previous financial year ranging from drought, outbreak of locust with Covid -19 pandemic at the climax most of the sector still managed to grow.
“Despite the shocks experienced in individual and business incomes as a result of job losses and disruptions of value chains brought about by the advent of the Covid-19 pandemic among other challenges, we are glad to report that the Sacco sub-sector performed relatively well, with an upturn in all the key performance indicators, based on data collected,” said Mr Munuve.
Still on the growth track, total deposits held by the deposit taking (DT) Saccos stood at Sh412.45 billion in the quarter which is a 12 per cent improvement on the Sh368 billion recorded at the same time the previous year.
The chairman noted that even the unaudited results indicate that the non-performing loans portfolio for deposit taking saccos closed the year at Sh30.44 billion, out of a total loan book of Sh469.02 billion, representing 6.49 per cent of the total collection, which is against Sh25.79 billion, out of gross loans of Sh419.55 billion as at December, 2019.
The Sub sector is one of the sectors that have been worst hit by disruptions of Covid-19 pandemic, modelled along collecting deposits from members and lending to individual members.
Most Saccos, especially those drawing members from such sectors as Hotel and Travel, Entertainment, Horticulture, and Transport, are staring at low deposits from members as layoffs, pay cuts and closures affect incomes of individual members.
“We have been experiencing low deposits from members as well as a fall in demand for loans from members. We have been experiencing problems after suspending our sales representatives from moving from place to place collecting cash from members,” said Dorothy Makena, Marketing Manager, Southern Star Sacco Limited.
Munuve said SASRA is working towards the establishment of Deposit Guarantee Fund (DGF). The relevant legal amendments have been drafted and are currently being processed by the state department of cooperatives for onward submission to the National Treasury, and ultimately incorporation into the 2021 Budget Policy Statement and the accompanying Finance Bill.
“Already, guidelines have been disseminated to Saccos to help them in nominating trustees for appointment by the CS to the fund’s board of trustees. This board, which will comprise four trustees from the licensed Saccos, will be responsible for the management of the Fund. Once the nominations are made, the board of trustees will be appointed by the CS, operationalising the DGF,” he said.
“We are also in the process of implementation of deposit guarantee fund, that in case the Sacco collapses, members can have a soft landing; members can have a fall back where they can be refunded. Currently they are refunded up to Sh100, 000. But can be reviewed in future,” revealed Commissioner of Cooperatives Geoffrey Njang’ombe.
He says the planned guarantee fund is expected to mirror that of the Kenya Deposit Insurance Corporation (KDIC) that allows bank depositors to retrieve their cash in case of a bank failure.
