Saccos face tough times as regulator tightens control

Thursday, August 29th, 2019 00:00 |
Cash. Photo/Courtesy

The Sacco Societies Regulatory Authority (Sasra) is finalising plans to control another 300 deposit and non-deposit taking savings societies with asset base of at least Sh100 million, as it seeks to enhance surveillance on the multi-billion-shilling sub-sector.

For the remaining entities, which have a deposit of below an asset base of Sh100 million, the agency, which has previously been regulating only 175 entities, will work with county governments to ensure order. 

Chief executive officer John Mwaka, said the file on the new regulator’s plan is currently before National Development Implementation and Communication Cabinet Committee chaired by Interior Cabinet Secretary Fred Matiang’i, for  approval.

Already, the proposal, which will now see Sasra regulate 475 saccos, according to Mwaka, has received a go-ahead from National Development Implementation Technical Committee under Principal Secretary Karanja Kibicho.

The move is informed by the rampant fraud case in the sector which forced President Uhuru Kenyatta earlier this year to order for the proposed Sacco Societies Fraud Investigation Unit, a Sacco’s fraud investigation unit, to be effected.

Mwaka said Sasra and Directorate of Criminal Investigations boss George Kinoti, are working together to establish a team of detectives that will be part of the investigating unit to bolster surveillance to ensure saccos do not  defraud members.

“We have engaged Kinoti so that we can identify DCI officers who will be attached to Sasra as we want to enhance our surveillance on Saccos,” he told Business Hub.

Mwaka said the unit would deal with all saccos facing integrity issues and none would be spared, and warned Kenyans against joining savings and credit co-operative societies  owned by individuals.

However, the industry which has been thriving and impacting millions of people in the country – as reflected by its ranking as the best in Africa and seventh best globally, with an asset base of about Sh1 trillion – has attracted managerial fraudsters.

Managerial practices

Bad managerial practices and theft by officials have brought even giant savings societies to their knees due to liquidity problems that have seen them  unable to give dividends  and give loans, which are one of their primary objectives.

Experts say greed is the main cause behind individuals take advantage of Kenyans’ desperation to grow economically through the movement as well as gullibility, to start shadowy entities.

Most saccos accused of swindling people are individual entities that merge savings and credit services with real estate business, and according to Mwaka, the firms have taken advantage of desperation of many Kenyans.

Former Commissioner for Co-operatives Mary Mungai says suspect saccos have been luring their targets with irresistible deals, mostly very low lending rates and high percentage on dividends, but after collecting money, they close shop or refuse to meet their obligations.

However, Mungai, who retired recently says while there are several saccos which are doing well in the country, several others, including giant entities have left members in tears due to irresponsible management and fraud by the founders.

She cautions Kenyans against joining Saccos founded by individuals, saying most are out to reap from members’ deposits. Genuine firms, she says, have social aspects and must be member-driven but not profit-oriented.

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