POSITIVE PERFOMANCE

Resilient Saccos grow deposits despite Covid-19

In Summary
  • Member deposits rose 13.31% on average in 2019-20 to reach Sh431.09 million
  • Among the measures that SASRA implemented to cushion Saccos against the adverse effects of the Covid-19 pandemic were suspension of AGMs last year
Sacco Societies Regulatory Authority CEO John Mwaka during the 6th KUSCCO leaders conference in Mombasa.
Sacco Societies Regulatory Authority CEO John Mwaka during the 6th KUSCCO leaders conference in Mombasa.
Image: COURTESY

Saccos showed great resilience to return impressive results in 2020 despite the disruptive effects of Covid-19.

Member deposits rose 13.31 per cent on average in 2019-20 to reach Sh431.09 million, compared to an 11.27 per cent growth in 2018-19.

A number of Saccos were adversely affected by job losses, pay cuts and unmitigated shifts in the financial priorities of households, which relegated loan repayments to the back burner. But they have shown great resilience, which ensured stability in the sub-sector,” said SASRA chief executive John Mwaka.

Among the measures that the Sacco Societies Regulatory Authority implemented to cushion the entities against the adverse effects of the Covid-19 pandemic were the suspension of Sacco AGMs last year; online approval of Saccos' audited accounts and allowing Saccos to restructure member loans.

The regulator also reviewed the frequency of submission of liquidity and risk classification and asset provisioning returns.

Most adversely affected by the pandemic were Saccos that operate in businesses that rely on local and international travel, which were hardest hit by the initial restrictions imposed by governments the world over, including Kenya, to stem the tide of infections mid-last year; aviation, hospitality, transport and horticulture.

Other key performance indicators in the subsector showed an upward trend, albeit at a slower pace.

There was growth in assets, evidenced by an increase in the annual average growth rate of 13.31 per cent in 2019-20 to reach Sh630.8 million, compared to 12.41 per cent in 2018-19.

Gross loans, buoyed by the ease on travel restrictions in the latter half of the year and other measures to resuscitate the economy, maintained a steady rise from an average growth rate of 12.1 per cent in 2018-19 to 13.14 per cent in 2019-20, to hit Sh474.69 million.

Mwaka spoke during a Sacco leaders’ convention in Mombasa.

The regulator used the occasion to educate leaders of non-deposit taking Saccos on the Sacco Regulations 2020, whose aim is to bring such entities under the regulatory mandate of SASRA.

Currently, SASRA regulates some 172 deposit-taking Saccos.

The Regulations 2020, which came into effect on January 1 this year, aim at bringing prescribed non-deposit taking Saccos under the regulatory ambit of SASRA.

These Saccos include those with member deposits totalling Sh100 million and above; those that mobilise membership and subscription to their share capital through digital or other electronic payment platforms; and those that mobilise membership and subscription to their share capital from persons, “who are ordinarily resident outside the country (Kenya).”

These NDT Saccos, which SASRA estimates to be around 400, have till June 30, 2021, to register their particulars with the regulator.