In the midst of its ongoing financial crises, listed media group Standard Group has not been remitting Sacco deductions to Network Sacco, placing the industry Sacco at the risk of collapse as contributions and credit repayment instalments are delayed.
- Network Sacco has membership drawn from the editorial department and senior management staff at Standard Group, as well as other departments of the Mombasa Road-based media house.
- Sources disclose that financial troubles at the Sacco have been brought to the attention of Cabinet Secretary, Ministry of Co-operatives and Micro, Small and Medium Sized Enterprises (MSMEs) Development Simon Chelugui as well as to the industry regulator, the Sacco Societies Regulatory Authority (SASRA).
“Dealing with this problem of employers who fail to remit Sacco dues is a tricky legal area that the regulator cannot wade into. This is because the employer is an agent of the Sacco and therefore not under the regulator’s supervision,” Peter Njuguna, Chief Executive Officer at SASRA said in a response to enquiries from The Kenyan Wall Street.
- Statistics by the regulator show that a total of KSh 2.81 billion was owed to some 50 financial co-operative societies by various employer institutions in 2022, down from KSh 3.4 billion in 2021.
- There are two traditional forms of remittances from employer firms and organizations: remittances designated as non-withdrawable deposits deductions, and remittances designated for periodic repayment of loans and credit facilities.
- The ripple effects of Standard’s financial crisis means that Network Sacco’s members, who have not been paid for months, can also now not access loans against their deposits, nor can they withdraw their deposits if they want to exit the Sacco.
“What the regulator has been doing is encouraging affected SACCOs to work closely with employers to understand why there is a delay in remittances. In the case of country governments and assemblies, the excuse has always been that the national government has delayed in disbursing funds to the country government,” Njuguna said.
- According to Njuguna, it is the employer who has a contract with a Sacco, an arrangement that does not involve the Sacco regulator. He added that powers to take action on culprits who fail to remit Sacco dues lie in the office of Commissioner of Co-operatives Development.
- But industry players see the Commissioner’s office as lacking the legal teeth to do much.
Earlier this month, the Kenya Union of Journalists (KUJ) issued a two-week strike notice to the media group, which responded by saying the delayed payments issue remains “a top priority” in its ongoing restructuring efforts.