Savings and Credit Co-operative Societies (SACCOs) are the backbone of the financial industry in Kenya, but now the collapse and financial challenges facing some Saccos have sparked anxiety in the trillion-shilling sector.
A number of saccos are facing liquidity challenges and are at the risk of going under.
According to the Department of Cooperatives, there are 23,000 registered cooperative societies, which share among them 14 million members. Collectively, the cooperatives hold Sh732 billion of member savings, control an asset base of Ksh. 1 trillion and a Kshs. 700 billion loan portfolio.
Kenya’s cooperative movement is ranked high in Africa and is one of the best globally due to its asset base.
The government is under pressure to speed up regulations to help rein in saccos that have defrauded members.
Early this year, Ekeza Sacco was in the limelight for defrauding members of their hard-earned cash. The founder David Kariuki Ngari alias Gakuyo in May 2019 said that he had drawn a time plan to refund the over Kshs, 2.4 billion that were audited as having been misappropriated by the senior management team.
However, is the mismanagement in the Sacco sector a result of weak management?
Despite the rosy picture, the insistence for better management of cooperatives betrays the anxiety of the sector in the back of the collapse of a number of saccos.
Experts argue that, despite a rosy picture, weak legislation, poor financial management, leadership and governance have doomed a number of the cooperatives to failure.
Other Saccos such as Metropolitan Sacco are on the red line while others such as Nitunze Sacco and Ekeza (named before) have gone under, and with them the lifeline of thousands of their members.
Recently, President Uhuru Kenyatta said the government will increase policy interventions to fix loopholes in the sector.
“I direct the Ministry of Industry, Trade and Co-operatives to fast-track the formulation of the National Co-operative Policy and immediately operationalise the proposed Sacco Societies Fraud Investigation Unit (SSFIU) within the Sacco Societies Regulatory Authority (SASRA),” said the President.
SASRA under CEO John Mwaka has been accused of turning a blind eye to the run-away mismanagement of the sector.
The cabinet is said to be seriously considering restructuring Sasra, through a draft policy so as to be strengthened “to allow it regulate all financial cooperatives,”.
The Ministry of Industry, Trade and Co-operatives believes that a closer cooperation between the national and county government will help make Sacco management better.
CIC Group, the leading co-operative insurer in Africa, through Mr. Richard Nyakenogo, the Group General Manager for Co-operative Business, also believes that the close cooperation between the national and county governments aided by clear policies will make the running of Saccos better.