Government and its related agencies continue to be the greatest defaulters in remitting funds owed to regulated SACCOs, offering the excuse of inadequate fundings or budgetary allocations despite the defaults cascading to loans and financial stability.
- Public universities and tertiary colleges owed a total of Kshs 958.07 million (37 per cent of the total non-remitted funds); County Governments (and Assemblies) owed a total sum of Kshs 865.12 million (33.41 per cent of the total non-remitted funds); while state corporations owed a total of Kshs 162.89 million (3.08 per cent of the total non-remitted funds).
- This situation is exacerbated by the fact that the largest proportion of the non-remitted funds amounting to Kshs 1.68 billion (83 per cent of the total non-remitted funds) was in respect of loan repayment deductions, with the implication that members defaulted on the loans.
- The total amount of non-remitted funds owed to Regulated SACCOs in 2023 remained at a high of Kshs 2.59 billion compared to Kshs 2.67 billion in 2022; with a total of 82-Regulated SACCOs and 57,721 members affected.
“This has made the recovery of these non-remitted funds quite difficult based on the prevailing legal and regulatory instruments, we are calling for a policy shift so that these funds may be deducted at source by the National Treasury from the exchequer grants appropriated by Parliament in favour of the defaulting government institutions, and directly remitted to the affected Regulated SACCOs,” says Jack Ranguma, Chairman The SACCO Societies Regulatory Authority (SASRA).
“This remains the most viable policy solution to this menace, given that employer institutions from the private sector had a relatively low proportion of non-remitted funds,” he said.
The former Kisumu Governor noted that despite concerted efforts by the Authority and the Commissioner for Cooperative Development to address the menace using the existing legal and administrative instruments,
SACCO Sector Grows Despite Challenges
According to Sassra Chief Executive Officer, the deposit taking-SACCOs segment had their aggregate core capital increase by 7.14 percent in 2023 to reach Kshs 133.81 billion in 2023 from Kshs 124.89 billion recorded in 2022.
The Non-Withdrawable Deposit-Taking SACCOs (NWDT SACCOs) segment on the other hand had their aggregate core capital increase by 35.77 per cent to reach Kshs 14.46 billion in 2023 from Kshs 10.65 billion recorded in 2022.
The key capital adequacy ratios for DT-SACCOs of core capital to total assets (CCA) and institutional capital to total assets (ICA) on the other hand were maintained at 16.07 per cent and 9.11 per cent respectively in 2023 which were equally above the regulatory minimum of 10 per cent and 8 per cent respectively.
The NWDT-SACCO segment equally maintained its key capital adequacy ratios of core capital to total assets (CCA) and retained earnings to core capital (RCC) above the prescribed minimum thresholds of 8 per cent and 50 per cent respectively at 10.40 per cent and 62.49 per cent respectively.
“The foregoing growths in the key financial stability indices of capital and capital adequacy ratios shows continued overall stability of each segment of the Regulated SACCO industry,” he said.
The SACCO Societies Regulatory Authority forecasts a continued growth in the key parameters of performance of Regulated SACCOs in 2024, which will largely be driven by a strong prudential regulatory foundation, continued demand for SACCOs’ credit financial services, and increased member patronage.
Stiff competition from other financial service providers as well as other economic shocks may however slow down the rate of deposit mobilizations, which may drive them to resort to external debts in the medium to short term to fund their assets, thus undermining their performance.
