The Sacco Societies Regulatory Authority (SASRA) will seek National Treasury’s intervention in the recovery of non-remitted deductions by counties to saccos to the tune of Ksh 1.4 billion.
According to the regulator, county government and county assemblies accounted for 50pc of Ksh 2.7 billion in non-remitted deductions last year which include loan repayment deductions, non-withdrawable (BOSA) and savings deductions.
“The fact that these employer institutions are funded by exchequer funds has made recovery of the non-remitted deductions owed them not only cumbersome and subject to availability of funds, but equally riddled with conflict of interest by the key actors in the recovery process,” said Jack Ranguma SASRA Chairman.
SACCO Supervision Annual Report indicates that while non-remitted deductions reduced from Ksh 3.4 billion last year, many employer-institutions continue to hold members’ deduction a factor that is leading to loan defaults and hindering saccos from meeting their financial obligations.
“In this regard, the Authority is considering putting in a framework to enable the recovery of such non-remitted SACCOs’ deductions through the National Treasury directly from the exchequer grants or funds appropriated in favour of these governmental institutions,” added Ranguma.
The report indicates that non-remittance of deductions affected 66,452 members in 80-regulated saccos last year.
Also found to be holding sacco funds are public universities and tertiary colleges which owed a total of Ksh 620.5 million accounting for 23pc of the total non-remitted funds.
“The bulk of the non-remitted deductions amounting Ksh 2.02 billion which is equivalent of 74.8pc of the total non-remitted funds related to loan repayment deductions, implying that loan portfolios of proportional amounts stood defaulted, besides undermining the liquidity position of the affected Regulated SACCOs to meet their financial obligations,” said Peter Njuguna, SASRA Chief Executive Officer.
The sacco sector gross loans last year rose by 11.8pc to reach Ksh 680.4 from Ksh 608.8 billion with Deposit Taking- Saccos recording the highest growth rate in gross loans at 12.2pc to reach Ksh 586.16 billion while Non-Withdrawable Deposit-Taking SACCOs gross loans increased 8.9pc to Ksh 94.2 billion.
Industry total deposits also increased 9.9pc to reach Ksh 620.45 billion in 2022 compared to Ksh 564.9 billion recorded in 2021.
On the other hand, Saccos reported a 10.3pc year-on-year growth in total assets which surged from Ksh 807.3 billion to Ksh 890.3 billion last year.
According to SASRA, sacco movement in Kenya now boats of 6.42 million members, a 7pc increase from 5.99 million members in 2021.