Why cooperators must seal all loopholes to build image of sector


The importance of Saccos as suitable vehicles for mobilising local savings and extending affordable credit to their members requires no belabouring.

The impact of the Sacco movement on the country’s economy has over the years been hailed as significant and a success story in the region and beyond.

Stories abound that some big Saccos are larger than some commercial banks in terms of their capital base, which is indeed a major milestone for the cooperative sector as a whole.

It is against that background that the government formulated new laws intended to put more Saccos under the direct regulation of the Sacco Societies Regulatory Authority (SASRA) from July 1, 2021.

The Specified Non-Depisit Taking Business Sacco Societies Regulations, 2019 targets Saccos with minimum deposits of  Ksh100 million.

Saccos that recruit members electronically and those with members drawn from the diaspora will also come under SASRA’s control.

The regulations imply that close to 400 Saccos hitherto supervised under the Cooperative Societies Act have to comply with the stringent prudential standards set out in the new regulations or face the consequences for any breaches of the law.

SASRA now regulates the new category of Saccos, in addition to the 176 Deposit Taking Saccos that were hitherto under its watch.

SASRA was created to enhance professionalism in Saccos and ultimately ensure that member’s deposits were secured.

It was also to ensure that members withdrawing from Saccos would easily access their deposits once they had served requisite withdrawal notices as provided for in the respective Sacco bylaws.

That notwithstanding, cases of some DT Saccos members not recovering their deposits in time once they cease to be members are still common.

A survey conducted by one industry monitor indicated that only about 11 to 12% of Kenyans have full confidence in their Saccos.

That explains why most members transfer the loan monies to their commercial bank accounts immediately they are released to them.

It may be unrealistic and impractical for SASRA to police all the Saccos effectively since resources, human and otherwise are obviously limited.

The way out therefore is to explore additional and more sustainable options of securing members funds.

The most sustainable option is to continually built in-house capacity structures and systems that make it difficult for Sacco managers to misappropriate or misapply members funds .

Since we are now living in a rapidly changing technology-driven era, it would be prudent to seriously consider setting up shared platform) that are centrally controlled for convenience and for cost effectiveness.

The introduction of delegates system for example, convenient as it may be, has also seriously eroded the members grip on the affairs of their Saccos.

In many instances, members have been reduced to mere customers since they lack platforms to be heard, hence getting seriously disenfranchised while their concerns remain unaddressed in real time.

My view is that the sector needs to embrace more of self-regulations so that the cooperators do not blame government agencies for wrongs perpetrated by their own managers.


We all know that companies are more efficient than cooperatives yet they don’t enjoy close government surveillance as is the case with cooperatives.

It is otherwise unacceptable in this time of technology for members to lose their lifelong savings through manipulation by those elected or appointed to manage these entities.

The long and short of it is that, let the stakeholders direct their energies on building the image of the cooperative sector by sealing all loopholes that are exploited by those in positions of leadership.

Formulation of policies and enactment of laws alone won’t be the only panacea for the challenges that characterise the Sacco sub-sector.

By Fred Sitati

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