GUARANTORS PAYING DEARLY

Loan defaulters grow at giant sacco over Covid-19

Amount in default has grown by Sh7 million compared to last year between July and December

In Summary

• Among the defaulters are Kakamega and Vihiga MCAs and members of the executive in the two counties.   

• Guarantors have taken the brunt of the default as their salaries are deducted by the giant Sacco to recover loans owed by their colleagues.

The Kakamega Invest and Grow (IG) Sacco head office in Kakamega town
The Kakamega Invest and Grow (IG) Sacco head office in Kakamega town
Image: HILTON OTENYO

MCAs and members of the executive from Kakamega and Vihiga counties are among loan defaulters at Invest and Grow (IG) Sacco.

The defaulting rate at the sacco has increased by over 16 per cent in the last six months.  The rise in the number of defaulters has been attributed to the harsh effects of Covid-19. 

According to records at the sacco's finance department, the amount in default has grown by Sh7 million compared to last year between July and December. The amount stood at Sh43 million in December and has grown to Sh50 million by close of June.

Guarantors have taken the brunt of the default as their salaries are deducted by the sacco to recover the money owed.

The loans were accrued by ward reps when they were issued with car loan and mortgage facilities by the county. 

"Most of these defaulting MCAs have since transferred their pay points from the sacco to other commercial banks to avoid being deducted. This leaves us with no option but to deduct the guarantors," a source at the finance department, who declined to be named, said.

Nominated MCA Lucy Chogo whose salary is being deducted to settle a loan she guaranteed  a colleague said she was contemplating moving to court to seek orders to declare the defaulting MCAs bankrupt so they can lose their seats.         

Fifteen MCAs last year moved to court to and obtained orders blocking the assembly from recovering the cash through auction.

The assembly leadership had served them with demand notices.

 

Edited by R.Wamochie