By Sammy Chivanga
The Sacco Societies Regulatory Authority (Sasra) is facing increased budgetary strain as the number of Saccos under its regulation more than doubles.
Sasra requires more money to strengthen its oversight capabilities given that Saccos under its mandate have increased after it started regulating non-withdrawable deposit taking Saccos with deposits of at least Sh100,000.
The regulator, which oversights 175 deposit taking Saccos, says there will be increased supervisory work with the new Saccos coming on board.
“The entry of non-withdrawable deposit taking Saccos with effect from 1st January 2021 means that there is an increase in the supervisory and regulatory activities, let alone oversight with regard to the new Saccos,” says Sasra.
Sasra’s mandate was expanded last year via the Sacco Societies (Non-Deposit Taking Business) Regulations 2020, which allows it to supervise non-withdrawable deposit taking Saccos with deposits of at least Sh100,000.
The onboarding of new Saccos means Sasra now has more than double the number of Saccos to regulate and will have to be thorough to ensure billions of deposits held by these entities are secure.
Sasra reckons it will have to raise its staff size, expand and improve its ICT supervision and regulatory infrastructures and expand other assets such as furniture and office space, leading to increased spending.
“The expansion of the Authority’s mandate has also widened the scope of the mandatory public participations and consultations, trainings, capacity buildings and points of reference before making any major supervisory or regulatory decisions. This will result into increased expenditures by the Authority,” says Sasra.
The regulator had sought increased allocation from Treasury but it is not clear whether this request was granted.
The budget allocation was to supplement the annual levy that the regulator will also be collecting on the total deposits held by the Saccos that are now coming under its supervision.
Sasra had proposed to introduce 0.165 percent annual levy for the non-withdrawable deposit taking Saccos that have come under its supervision for the first time.
However, chief executive Peter Njuguna says the regulator has now cut this to 0.15 percent after consultations with Saccos.
The levy will be applied to the 185 non-withdrawable deposit taking Saccos that recently came under its regulation holding over Sh80 billion as combined deposits.
Sasra has traditionally been supervising deposit-taking Saccos alone, from where it has been collecting a levy of 0.175 percent of total deposits but says its resources are already stretched and will have to rope in the new Saccos.
“It would be discriminatory and unfair to utilise the said resources, which are inadequate in the first place, to fund the oversight of the non-withdrawable deposit taking Saccos,” says Sasra.
The levy on non-withdrawable deposit taking Saccos is therefore to ensure fairness and equity, according to Sasra.
The amount presents a new compliance cost for the Saccos which have traditionally been supervised by the Commissioner of Cooperatives under the State Department for Co-operatives.
The money will be in addition to the Sh50,000 authorisation fee that these Saccos have to pay at the start—which Sasra says is insufficient to cover all the direct and indirect costs.
“It has been proposed that the levy imposed and payable shall be paid within 30 days upon an assessment notice being served by the Authority upon the non-withdrawable deposit taking Saccos,” says Sasra.
Sasra received 199 applications but initially approved 169 spread out in Nairobi (121), Kiambu (17), Mombasa (10) and other counties (21). An additional 16 were later on approved.
The regulator says the annual levy collected from deposit-taking Saccos has been insufficient to fund its operations, forcing it to operate below optimum levels since its establishment in 2010.
Sasra has for instance between 2010 and 2020, operated with a staffing level of 68 against the approved 98.
The approved level of staff currently stands at 139 after the onboarding on non-withdrawable deposit taking Saccos but Sasra is yet to hire additional staff.
Sasra has since its inception been depending on donors such as World Bank and FSD-Kenya but says the donor support has substantially been scaled down or stopped altogether.
