Savings
and Credit Cooperative Organisations (Saccos) did not escape the brunt of the tough
economy faced by both families and businesses, with employers failing to remit
Sh4.2 billion of members’ funds in 2024.
The latest Saccos Supervision Report unveiled on Wednesday in Nairobi shows that non-remitted funds in 2024 affected a total of 85 regulated Saccos (62-DTSaccos and 23 NWDT-Saccos), involving a total of 55,602 members of Regulated SACCOs (consisting of 49,821 members of DT-Saccos and 5,781 members of NWDT-Saccos).
According to the report, Sh3.10 billion (74.5 per cent of the total non-remitted funds) was meant to repay loan and credit facilities issued to the affected members, meaning that these loan and credit facilities remain largely defaulted, and the liquidity and ability to meet financial obligations remain severely undermined.
“Such non-remittances of loan repayment due have also led to conflicts between the Saccos affected and their members, such as contested listings in the Credit Reference Bureaus (CRBs), qualification for additional loans by the members, among others,’’ the report reads in part.
The government owed the bulk of the non-remitted funds and government-owned institutions.
For instance, county governments and assemblies owed over Sh1.61 billion (46.1 per cent), followed by the public universities and tertiary colleges, which owed Sh762.27 million (21.9 per cent), while the state corporations owed Sh164.76 million (4.72 per cent).
These monies can be easily deducted directly from the exchequer grants due to these governmental entities, instead of
To rectify this, the regulator, the Sacco Societies Regulatory Authority (SASRA), is calling for policy reforms to allow the recovery of such sums directly from their exchequer grants at the National Treasury.
Even so, the cooperative movement in Kenya, particularly Saccos, has been instrumental in the country’s social economy, contributing significantly to the Gross Domestic Product (GDP).
Sasra report shows that the movement now accounts for 6.63 per cent of Kenya’s GDP, up from 5.6 per cent a decade ago.
According to the report, the sector’s total assets have more than tripled in the decade, crossing the trillion mark for the first time to reach Sh1.076 trillion as at December 2024 from just about Sh301.54 billion in 2014.
The total membership also more than doubled to 7.39 million members in 2024 from just under 3.08 million members in 2014; while the total savings and deposits mobilised tripled to reach Sh749.43 billion in 2024 from Sh205.97 billion a decade ago, thereby underscoring the growing popularity of Saccos in Kenya, as viable socio-economic investment vehicles.
The DT-Saccos segment, which is the most dominant in the industry given that it controls over 80 per cent of the industry’s total assets, deposits and loans, largely registered increased capitalisation in all the key capital adequacy ratios.
The key capital to total assets ratio increased to 17.28 per cent in 2024 against the prescribed minimum of 10 per cent from a ratio of 16.07 per cent in 2023, which was largely driven by increased retention during the reporting period.
This is further evident in the increase in their institutional capital to total assets ratio to 11.97 per cent in 2024 against the prescribed minimum of eight per cent from a ratio of 9.1 per cent in 2023.
With regard to the NWDT-Saccos’ segment of the regulated Sacco industry, their aggregate core capital to total assets ratio increased to 10.9 per cent in 2024 against the prescribed minimum ratio of eight per cent from a core capital to total assets ratio of 10.4 per cent recorded in 2023.
Their core capital to total deposits ratio, on the other hand, increased to 14.3 per cent in 2024 against the prescribed minimum of five per cent, compared to a ratio of 13.5 per cent recorded in 2024.
In addition, their retained earnings and disclosed reserves to core capital, which should be maintained at not less than 50 per cent, also increased to 66.9 per cent in 2024 from 62.5 per cent in 2023 against the backdrop of regulatory pressures and advocacy towards increased retention.
The overall analysis shows that there was a marked improvement in the quality of loans and credit advances issued by regulated Saccos in 2024, with 86.71 per cent of the total loans performing in accordance with the contractual agreements compared to 86.33 per cent in 2023.
The proportion of loans and credit advances that were classified under the watch category and thus deemed to be outstanding for between a day and 30 days also dropped to 4.9 per cent in 2024 from 5.2 per cent in 2023.
