Official: Majority of saccos in Kenya poorly regulated
Only 175 out of an estimated 5,000 Saccos in the country are regulated by Sacco Societies Regulatory Authority (Sasra), leaving the bulk of them poorly supervised and at the mercy of fraudsters.
Currently, Sasra regulates only deposit-taking Saccos while non-deposit taking ones fall under the supervision of Commissioner for Co-operatives in the Ministry of Trade and Co-operatives.
“Registration and regulation of non-deposit taking Saccos takes place at the Ministry (Trade and Co-operatives) under the Commissioner for Co-operatives,” says Sasra Head of Corporate Communications Ann Kago.
She said currently Sacco Societies Act only mandates the authority to regulate the deposit-taking entities.
However, Sasra, is working on regulations, now at an advanced stage, that will see the non-deposit taking saccos brought under its supervision.
“Once the regulations are adopted, the non-deposit taking saccos will be brought into the Sasra’s fold. For now, they continue to be domiciled at the ministry,” Kago said. Non-deposit taking saccos form the bulk of the societies in the country yet they are poorly regulated, according to the co-operative movement’s apex body.
Co-operative Alliance of Kenya (CAK) has, on several occasions, faulted the quality of supervision of non-deposit taking Saccos, a devolved function, saying the county co-operative offices were underfunded and ill-prepared to supervise and audit co-operatives.
“We need a national co-operative policy and a legal framework in the country to seal these loopholes,” said Chief Executive, Daniel Marube.
“The promulgation of the Constitution of Kenya in 2010 was meant to bring good tidings to the co-operative sector, but it is not so,” he added.
Saccos operating in an unregulated environment exposes members to the risk of fraud and other unethical practices that could result in members losing their savings. In July last year, Sasra and other regulators released a statement warning the public against purchasing unregulated products.
“The purpose is to warn members of the public against the unregulated financial services and remind them to deal only with genuine and licenced financial institutions and entities,” the joint statement reads partly.
Immense risks posed by fraud in Saccos has caught the attention of President Uhuru Kenyatta, who during this year’s Ushirika Day celebrations, ordered Cabinet Secretary in charge of co-operatives Peter Munya to make Sacco Societies Fraud Investigation Unit to be based at Sasra offices, operational.