Saccos to fight cybercrime through shared platform

cumulatively SACCO'S spend over Sh1.2 billion annually to tame online threats

In Summary

•SASRA says that currently SACCOs are individually spending about Sh5 million annually on the operations and maintenance of their individual MIS and ICT infrastructures.

•As at the end of February 2023, SASRA regulated a total of 359-SACCOs consisting of 176 Deposit Taking SACCOs and 183 Non-Withdrawable Deposit Taking SACCOs.

Cooperatives CS Simon Chelugui on January 14, 2023.
Cooperatives CS Simon Chelugui on January 14, 2023.
Image: FILE

The cooperatives and Sacco sector is set to benefit from shared technology  with the actualisation of Sacco Societies Shared Services Platform.

This means Sacco’s and Cooperative Unions will now begin sharing Management Information Systems (MIS) and ICT infrastructure under the watch of Kenya SACCOs Central Liquidity and Shared Services Cooperative Society Limited.

The shared services platform will create a regulated shared services facility and a central liquidity system in addition to enabling the running of deposit insurance programs for Sacco’s.

While common in countries with strong Sacco systems, the shared service has not worked in Kenya mainly because of inadequate regulatory framework to address mistrust among participants.

According to C0-operatives Cabinet secretary Simon Chelugui, the move will cushion the small Sacco’s from huge cybercrime investments. 

“The aggregated performance parameters of the regulated Saccos look quite impressive. But behind the scenes and as has been observed by SASRA there is a very skewed growth performance among individual Saccos,” said Chelugui during the inaugural AGM for the Kenya SACCO Central.

Sacco Societies Regulatory Authority (SASRA) says that currently Saccos are individually spending about Sh5 million annually on the operations and maintenance of their individual MIS and ICT infrastructures, excluding the initial capital outlay for acquisition and deployment.

This cumulatively translates to over Sh1.2 Billion annually as monies spent by Saccos on MIS and ICT, yet they could spend hardly a half of the same amount annually if they were to share the MIS and other ICT infrastructure.

Chelugui noted that the few large-assets based Saccos (Large-Tier) are growing at a faster rate than their mid or Small-Tiered counterparts tilting the scale in their favour.

“The Mid and Small-Tiered Saccos with assets of below Sh5 Billion and which constitute over 75 to 80 percent of all the Regulated Saccos are seriously struggling to meet their financial obligations of their members which in the current age, is informed by usage of ICT for ease and convenience,” added the CS.

Integration of the system according to stakeholders in the sector will ward-off stiff competition in the financial space which is mainly driven by technology and digitisation, and

He noted that the reliance on third-party fintech partnerships and agreements have come with a huge financial costs and expenses to the Saccos, which would otherwise be ploughed back for the benefit of the members.

In addition, these partnerships with fintechs have over-exposed Sacco’s operational risks, particularly cyber-attacks, data protections breaches, perennial service downtimes, and competitors’ sabotage.

These risks would again be minimised by these Saccos coming together in single shared services platform.

The Kenya SACCO Central was registered late last year, but according to the requirements of the law, it had to wait until after the inaugural Annual General Meeting to formally start its operations.

As at the end of February 2023, SASRA regulated a total of 359-Saccos consisting of 176 Deposit Taking Saccos and 183 Non-Withdrawal Deposit Taking Saccos serving about six million Kenyans directly as members.

In the period the institutions had total assets amounting to Sh894 Billion with savings portfolio amounting to Sh625 billion.


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