Savings and Credit Societies( SACCOs) restructured loans totalling KSh 4.7 billion in 3 months to June 2020, reflecting the difficulties members were facing in loan repayment.
According to the Kenya Financial Sector Stability Report 2020, October 2020, Issue No. 11-published by the Financial Sector Regulators, Agriculture and Micro and Small Enterprises (SMEs) sectors have been affected most by the COVID-19 pandemic, making it difficult for members to service their loans.
On the list of big tier agro-based, DT Saccos is Ukulima, Tower, Mentor, Bingwa, and Boresha.
The report warns that while the Sacco industry has strong capital adequacy levels, sufficient liquidity and earning capacity to withstand shocks and vulnerabilities, credit risks remain elevated.
Non-performing loans have increased from 5.2% of the loan book to 9.1% in June 2020.
Kenya’s Sacco industry is among the biggest in Africa, with 5.7% of total assets to GDP
ratio, followed by Rwanda and Ethiopia, with 3.0% and 0.7%, respectively.
Growth of the Saccos industry has leveraged on the rapid adoption of technology and innovations in providing financial services and products coupled with the opening up of the common membership bond.
An enhanced legal and regulatory environment has also helped the Saccos industry grow and be accessed by 28.4% of the adult population as of December 2019, the highest in Africa.
Total assets for all Deposits Taking SACCOs grew by 11.8% to KSh 555.9 billion in 2019 and by 3.2% in the first half of 2020.
The gross loans accounted for 73.9% of the total industry total assets, mainly funded from members’ contributions and deposits, which grew by 11.3% in 2019.
SASRA, in collaboration with other stakeholders, has initiated reforms to address potential
vulnerabilities and strengthen the Sacco industry.
These reforms include Regulations requiring all deposit-taking Saccos to report sectoral loans for improved risk assessment.
Sacco Societies Regulatory Authority(SASRA) has also been mandated to regulate and supervise all non-deposit taking Saccos
The industry has also operationalized the SACCO industry safety net- the Deposits Guarantee Fund- by appointing the Fund board of trustees.
Based on the assessment of fundamental performance matrices, the industry remains resilient and
stable to withstand shocks and vulnerabilities.
When the first COVID-19 case was reported in Kenya in March, the SACCO industry held savings worth KSh 766 Billion with a membership of 4.9 Million.
SACCOs have beaten the pandemic after SASRA cut capital adequacy by 50% and liquidity requirements by 50%. Central Bank of Kenya( CBK) also took a similar measure by lowering the cash reserve ratio, injecting more liquidity into the banking system.
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