Sacco Societies Regulatory Authority (Sasra) CEO Peter Njuguna.
Sixty saccos shed Sh970 million deposits last year as members quit triggering sector regulator to ask management to cut thousands of apathy driven exits, which are imperiling stability of the cooperative movement in Kenya.
The Sacco Societies Regulatory Authority (Sasra), which polices deposit-taking (DT) and large non-withdrawable deposit-taking (NWDT) saccos, said the fall in deposits came in a year affected entities lost 131,590 members through exits..
Sasra says member exits arising from unemployment, retirement or dissatisfaction with services offered have been a common feature and is now threatening the stability of the saccos. For instance, one sacco lost 601 members without replacement.
“Such exits without new members joining the saccos, are likely to result into unsustainability risks as much as concentration risks whereby saccos end up serving just a few members,” said sasra in the latest supervision report.
According to the regulator, eight DT-saccos that lost 4,198 members in 2023 had also shed 16,389 in the previous year, implying that the eight have cumulatively lost 20,578 members over a two-year period. The eight added to 21 other DT saccos, which shed members last year.
An almost similar scenario was replicated with regard to 47-NWDT saccos whose membership declined last year, adding to 2022 when 18 of them had lost 1,719 members. This translates into a cumulative loss of 2,166 members over the two years period.
Any time a member of a regulated sacco exits through withdrawal of membership, the affected sacco is statutorily bound to refund the members any deposits or savings owed, less any obligations owed by the exiting member.
Leaving members therefore put saccos under pressure to mobilise fresh deposits equivalent to or more than the amounts being refunded to the exiting members so as to remain stable given that deposits are the main source of funding the loan book.
“It is, therefore, apparent that the future performance, stability, and sustainability of the regulated saccos which are experiencing negative growth in their members and their deposits, will be negatively impacted by the rate at which member’s exits and deposits decline take place,” said Sasra.
“Regulated saccos must, therefore, work round the clock towards member retention through the entrenchment of trust and confidence in the financial services and products in order to reduce any apathy driven member exits.”
Sasra is challenging saccos to ensure their financial services and products are tailored around members’ needs.
