Saccos mull ways to address non-remittance of funds

Employer based Saccos  must now  adopt alternative methods to generate income and remain afloat even during difficult economic times rather than relying on the unreliable employers who might remit their employees deduction at their own volition, leaving the societies at the verge of collapse when they cannot support their operations.

“Non -remittance of the dues is crippling operations, making it almost impossible for the Saccos to transact optimally as their financial bases were running out due to low liquidity levels. The impasse’ disrupts the financial base of the credit unions and the delay contributes to high non-performing loans,” said Ukulima Sacco Chairman Dr Philip Cherono

The deductions are in the form of either loan recovery or non-withdrawable deposit accounts, popularly known as back office service activities.

 He said some of the notable defaulters are institutions of higher learning which have since the onset of Covid- 19 pandemic failed to remit employee’s deductions, a trend that has led to non-performance and servicing of running loan packages.

According to former Cooperatives Commissioner Geoffrey Njang’ombe, issues of non-remittance of statutory deductions at the universities is historical and was aggravated by stoppage of parallel programs, where there was a lot of monies going to the universities.

“To ensure their Saccos continue to operate, we are advising them that all their members should patronize their front office activities (Fosa) products. These are all deposit taking (DT) Saccos with Fosa. Through patronization, all their dues, salaries will be channeled directly to the Fosas,” he said.

His sentiment was echoed by Kenversity Sacco Chief Executive Officer: (CEO) Alfred Korir.

“University owes us (the Sacco) about Sh300 monthly million deductions. We therefore asked our members to channel their salaries through the Sacco so that they receive their payments from us after we deduct our share. That is what has worked well for us for the last two years,” he said.

Kenya Union of Savings and Credit Co-operatives (KUSCCO) Managing Director George Ototo said remittance of statutory, loan and members’ deductions to Saccos and banks is a mandatory employer obligation.

However, University Academic Staff Union (UASU) Secretary General Dr. Constance Wasonga said failure by the institutions’ managements to remit the deductions is a criminal offence which should be dealt with by the law.

The government had warned that employers who default remitting their employees deductions to their respective co-operative societies within the stipulated period risk facing hefty fines.

Nathan Mukhweso, former Kakamega County Cooperative Commissioner, said the law gives powers to the Commissioner of Co-operative Development to direct any bank to transfer to the respective Sacco funds that have been deducted from employees’ salaries and not remitted.

According Sacco Societies Regulatory Authority (Sasra) reports, the highest proportion of total non-remitted deductions is owed by public universities and colleges.

“The highest proportion of the total non-remitted deductions amounting to Sh2.86 billion, representing 74.03 per cent of the total non-remitted deductions was owed by the public universities and tertiary colleges,” Sasra says in its latest report. 

By our reporter

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