By Malachi Motano
Sacco Society regulatory authority (Sasra) will have to improve its capacity to handle the swelling number of Savings and credit cooperative societies (Saccos) under their regulation, after the government added it even those that don’t take deposits (Non-DT Saccos)
“Non-Deposit Taking Saccos refer to those that take deposits from members only in the form of share capital. These amounts are refundable to members only when they leave the Sacco. On the other hand, Deposit-Taking Saccos, besides undertaking the traditional roles of Saccos (mobilization of savings and advancement of loans to members), also actively mobilize and receive withdraw-able deposits,” explains says Commissioner of Cooperatives Geoffrey Njangombe, for the purpose of clarity.
In the Sacco Societies (Non-Deposit Taking Business) Regulations, 2020 which took effect on January 1, 2021, Non-Deposit Taking Saccos currently holding members’ deposits amounting to Kshs. 100 million and above, will now be regulated by Sasra.
The regulation also targets those Non-DT Saccos which mobilise membership and subscription to their share capital through digital or other electronic payment platforms; or those that mobilise membership and subscription to their share capital from persons, “who are ordinarily resident outside the country (Kenya).
“Sasra has been regulating only the deposit taking (DT) Saccos which are 176 in number. Statistics available at the regulator show that there are about 300 that are not taking deposits and other 200 in the diaspora. That means if all the 500 Saccos meet the June deadline as required, then the regulator will have a large number to look at,” says Commissioner of Cooperatives Geoffrey Njangombe.
He says the government is intensifying efforts to address perennial challenges of poor governance and mismanagement in the Cooperatives Sector.
“Deposit taking Saccos are licensed by the regulator Sasra to operate. The Non – Deposit Taking Sacco, will not be licensed, but authorised. They have been given six months to comply. Fortunately, the requirements are less stringent; I mean their ratio is much lower compared to that of DT Saccos. In other word the risk is higher, for the DT Saccos than for the non DT. We are mainly focusing on governance and market products,” says the Commissioner.
As a start, the Saccos are required to file their detailed particulars with the Sacco Societies Regulatory Authority within 30 days of a notice published in the national press on January 29, 2021 by the Authority.
According to the Cooperative Commissioner, the Government has a responsibility to safeguard and put in place control measures to safeguard against malpractices through proper regulation mechanisms and the move was well received by all Saccos (DT and Non-DT) Sacos
“This is a critical milestone for the Authority. I encourage all the Saccos that are covered under the prescribed criteria to take advantage of the window and register with the regulator and apply for authorization. Sasra has already assembled the requisite resources to ensure a smooth process for all our stakeholders,” says the Commissioner.
He believes that by bringing the Non-Deposit Taking Saccos under the regulatory oversight of Sasra will extend the benefits of regulated savings and loan services to more Kenyans, while improving the stability and resilience of the sub-sector.
Other functions for the targeted Non-Deposit Taking Saccos the regulator is expected to oversight under Regulations 2020 other than authorizing their operation are, Capital Adequacy Requirements, Liquidity Management, Shares and Deposits, Credit Risk Management, Risk Classification and Assets and Provisioning, Investment and Associated Entities, Financial Performance Reporting, Governance, Consumer Protection, Information Security, Preservation and Business Continuity and Regulation and Supervision.
The regulator, estimates that there are about 400 Non-Deposit Taking Saccos that meet the criteria set under the Regulations 2020.In overall terms, the Authority puts the total number of Non-Deposit Taking Saccos in Kenya at 3,626, with a membership of over 1.5 million with the Total Assets estimated at about Sh188.02 billion, with Total Deposits and Loans at Sh140.54 billion and Sh136.89, respectively.
