Relief as saccos recover Sh482m members’ funds from struggling firms
Sacco Societies Regulatory Authority (Sasra) CEO Peter Njuguna.
Public and private firms released Sh482.3 million to Savings and Credit Co-operative Organisations (Saccos) in the year to June helping cut the pile-up of non-remitted deductions by various employers.
Data from the National Treasury shows that the surrendered amount was above the targeted Sh475 million and also an improvement from the Sh455 million that was recovered in the same period last year.
“The target was over-achieved as a result of the resumption of business activities and enforcement of the Cooperative Act,” says the State Department of Cooperatives.
The remittances offer partial relief to the many Saccos whose operations are usually hampered by the growing number of employers who deduct employees but fail to remit the money, especially to use it in managing cash flow challenges.
Such delays impact negatively on Saccos by denying them enough money to lend to members. The movement usually depends on members’ contributions to issue loans.
Sacco Societies Regulatory Authority (Sasra) data shows employer institutions were owing deposit-taking (DT) Saccos Sh2.67 billion at the end of December last year. This was affecting 80 Saccos and 66,452 individual members.
Out of the Sh2.67 billion, Sh2.02 billion or 76 per cent was meant to repay loans and other credit obligations advanced by the DT-Saccos to their members, meaning the non-remittances have also fuelled loan defaults in the Sacco sector.
Sasra has been working with Saccos to aggressively pursue the non-remitted cash, a move that is gradually paying off considering that the figure stood at Sh3.4 billion in 2021 and Sh5.04 billion in 2020.
County governments and their assemblies topped the list of defaulters at Sh1.35 billion or nearly half of the Sh2.67 billion non-remitted funds that were owed to Sasra-regulated Saccos by the end of December 2022. This affected 43,139 members.
Public universities and tertiary colleges followed with Sh620.52 million. That of state corporations stood at Sh143.1 million while public sector companies including water companies were holding Sh64.2 million.
National government ministries were holding Sh27.7 million while public schools’ employees were owing Saccos Sh12.5 million as that from constitutional bodies stood at Sh24.36 million.
Sasra is currently considering a framework that, if implemented, will see exchequer-funded entities including counties, public universities, and other State-linked entities lose part of their budget cash to compulsorily settle Saccos’ dues.
Jack Ranguma, the chairperson at Sasra said in the 2022 annual report the fact that recovery of non-remitted deductions from exchequer-funded entities is cumbersome since it is dependent on the availability of funds and also riddled with conflict of interest.
“In this regard, the Authority is considering putting in a framework to enable the recovery of such non-remitted Saccos’ deductions through the National Treasury directly from the exchequer grants or funds appropriated in favour of these governmental institutions,” said Mr Ranguma.
Such a move would mean the non-remitted funds are settled as a first charge then these entities receive what is left of their allocation after this is paid.
