- The Bill has so far been approved by the Cabinet and is currently at the Attorney General's office waiting for submission to Parliament.
- Chelugui said if enacted, it will be illegal to deduct members' salary and fail to remit to Saccos
Image: AGATHA NGOTHO
The government will soon have the power to seize accounts of employers who do not remit employees' contributions to Saccos, if the Cooperative Bill 2023 is enacted into law.
The Bill, which, been approved by the Cabinet is currently at the Attorney General's office waiting submission to Parliament.
It seeks to address many issues among them remittance.
“Where an employer of a person who is a member of a Cooperative has, under the instructions of the employee, made a deduction from the employee’s remuneration or payment for produce for remittance to the Cooperative concerned but fails to remit the deductions within seven days after the date upon which the deduction was made, the employer shall be liable to pay the sum deducted together with compound interest thereon at a rate of not less than five per cent per month,” the bill says.
“The Commissioner may, by written notice, appoint any person, bank or institution to be an agent of the Cooperative for the purposes of collection and recovery of a debt owed to the Cooperative."
Cooperative, Micro and Medium Enterprise Cabinet Secretary Simon Chelugui said if enacted, it will be illegal to deduct members' salary and fail to remit to Saccos.
“There are serious penalties on employers who do not remit funds to the cooperatives,” he said.
Chelugui spoke to the media during a forum with cooperative leaders in Naivasha.
“This is a practice that has killed cooperatives. We are talking about non-remittance of up to Sh4 billion. You can imagine a cooperative giving a member loans and then in anticipation of salary to come, it does not come or is not remitted," he said.
"Ideally, you are making that arrangement fail because the cooperative will no longer trust a payslip which is not remitting money."
The CS said saccos extend credit to their members based on trust, which will not work if employers are not doing their jobs.
The Bill also seeks to address the issue of the Board of directors of Saccos who defraud members.
He said that there have been cases where directors defraud their members and then resign to form new saccos.
“Thanks to this Bill, we will be able to track you. We will trace you and we will make it very difficult for you to form another Sacco. We will also hold members individually liable and even pursue his estate, just in case we lose him. Their family members will not be spared just in case he hides behind them,” Chelugui said.
“We are trying to bring discipline and anybody who aspires for any leadership role in the cooperative movement, must be men and women of high integrity. This is what we are pushing in the Bill."
Chelugui said the bill strives to bring integrity in the leadership of the cooperative movement.
"I want to assure potential and present members that those we entrust with leadership will have to work for the members or the law will be against them,” he said.
The CS said the ministry has so far helped recover Sh500 million out of the Sh4 billion, which was outstanding at the beginning of the year.
Chelugui said defaulters have through mediation by the State Department of Cooperatives, entered into agreements on how to clear the balance.
The Cooperative Bill 2023 is an improvement of the Cooperative Bill, which was passed by the last administration.
“We needed to domesticate it through the bottom-up economic transformation agenda. In this bill, we have various provisions, rights and obligations of the members,” he said.
The CS said the Bill has also redefined roles and separated roles between the national government and the county government.
Ideally, the county government will be dealing with registration, supervision and submission of records.
The commissioner of the cooperative, whose office will have a registrar, will be the custodian of the records.
“The commissioner of cooperative will also chair a forum of all directors of cooperatives, so that we have an apex, a body, like a federation, where all views, all cooperative issues are addressed in that forum,” Chelugui said.