400 Saccos targeted in move on diaspora, digital entities

Non-compliant entities to be shut

In Summary

•The regulations target entities with deposits worth Sh100 million and above.

•Those whose deposits are below Sh100 million and are neither virtual nor diaspora based to be overseen by counties.

Sasra chair John Munuve and Cooperatives PS Ali Noor during the launch of a Sacco sub-sector report/FILE
REPORT CARD: Sasra chair John Munuve and Cooperatives PS Ali Noor during the launch of a Sacco sub-sector report/FILE

At least 400 Savings and Credit Co-Operative Societies (Saccos) are now on the regulator's watch list as it moves to weed out rogue players duping the public.

These include diaspora and digital saccos as the Sacco Societies Regulatory Authority(SASRA) expands its oversight to non-withdrawable deposit-taking Saccos operating in the country, where there are more than 3,626 identified ones.

This is under the new regulations issued in May 2020 but took effect on January 1, 2021.

The 400 targeted for registration and regulation by the authorized account for 70 per cent of the Sh188 billion in assets and Sh140 billion in deposits controlled by unregulated small saccos.

The entities have until June 30 to lay open their operational structures including business plans, and come under the ambit of Sasra , with the regulator saying he will not extend the deadline which is two months away (June 30).

The regulations target entities with deposits worth Sh100 million and above, and which have been deemed to present a systemic risk to the government.

Those whose deposits are below Sh100 million, and are neither virtual nor diaspora based, are expected to be overseen by the respective county government co-operative offices where they operate.

“This will ensure that there is no room for any Sacco to operate without adequate government oversight,” Sasra said in a statement yesterday.

Currently, there are 175 deposit-taking Saccos in Kenya, as of March 2021, according to Sasra with hundreds of virtual and diaspora societies operating off the radar.

In the recent past, many Kenyans have lost their hard-earned savings in pyramid-scheme-like entities operating virtually and purporting to be Saccos, which dupe unsuspecting members of the public into saving virtually with them with the promises of good returns.

Immediately after mobilising money from the public, such entities almost always “disappear in the thin air”, Sasra acting CEO Peter Njuguna notes, leaving the depositors with no recourse.

“The new regulations will thus reign in on such dubious entities,” he said.

The regulations give Sasra oversight on these Saccos' capital, liquidity, investments, lending, or credit operations among others.

They are meant to ensure good governance structures in Saccos as well as mandatory minimum disclosures and transparency in their operations, to assist the public in making prudent investment decisions.

The regulator has warned the public against dealing with any Sacco Society which will not have complied with the new regulations by end of June.

“Any person, including members of the public and public entities who undertake such specified non-deposit-taking business transactions or other businesses with an unauthorised person, entity, or Sacco society, shall be doing so at his or her risk and peril”, Njuguna said.

In addition, the persons involved in such dealing may be liable to criminal prosecutions.

Since its establishment in 2010, Sasra has been supervising and regulating deposit-taking Saccos which most operate in a banking-like manner and offer similar banking services as those in the mainstream banking sector.

However, Saccos that do not undertake banking-like business popularly known as BOSA only or the non-withdrawable deposit-taking Saccos have never been prudentially regulated.