Inside Politics

Saccos warned of uncertainties despite high liquidity

Monday, October 5th, 2020 00:00 |
Sacco savings.

Low demand for loans is worrying Deposit Taking Savings and Credit Cooperative Organisations (DT-SACCOs).

This is in spite of the fact that they are enjoying  high liquidity levels.

Sacco Societies Authority (SASRA) has warned that despite a huge pool of cash, credit unions could struggle with low annual income as the savers reduced appetite for the loans.

SASRA Chief Executive Officer John Mwaka confirmed in an interview that about 90 per cent of the 175 DT-Saccos are awash with cash despite the pandemic.

“However, despite being awash with cash the institutions are facing low demand for loans as savers struggle with interrupted purchasing power.

Management of the idle cash will equally attract high cost and thus lead to low income,” Mwaka said.

He said there are more than 5,000 Saccos in the country out of which 80 per cent controls in excess of Sh600 billion in deposits and boosts of an asset base of more than Sh800 billion.

However, 20 Saccos in the transport, horticulture, hospitality and Aviation are grappling with low remittances and reduced profits as the sectors were hardest hit by the pandemic.

Kenya Union of Savings and  Credit Co-operatives Ltd managing director George Ototo said the future is uncertain.

“The world will be faced by an economic slump which Kenya will not escape.

The consequences will be huge as the institutions will record low profits and witness mass exodus of depositors,” said Ototo. 

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