Cooperatives and MSMEs Development Cabinet Secretary (CS) Wycliffe Oparanya has explained why Savings and Credit Cooperative Societies (Saccos) are collapsing in Kenya.
Addressing Senators on August 6, Oparanya acknowledged liquidity problems facing Afya Sacco, Moi University Savings and Credit Society (MUSCO), and several other societies in Kenya.
Oparanya explained that the majority of the Afya Sacco members work in the county governments.
He accused the county governments of causing this problem by failing to remit funds deducted from Sacco members.
Most of these liquidity problems are occasioned by county governments because most of the members are medical staff who are devolved. Several county governments have deducted members’ dues, but they have not remitted them in millions.
This has created liquidity problems for Saccos. This is what is affecting Moi University Sacco, Afya Sacco and others.
He explained that the issue of remittance has been addressed in the Cooperative bill that is before the Senate.
Oparanya Asks Senators to Support Bill
Oparanya asked the Senators to support the bill so that employers who fail to remit or divert Sacco members’ funds face legal consequences.
“I am happy that you have now noted how serious this matter is. When it comes to consideration, honourable members, I would request that you address this issue squarely in law. So those institutions that deduct money from Sacco but don’t remit it face serious action.”
He also clarified that there is a recommendation that the government should pump the Ksh500 million into saccos.
“As a government, I would not go the route of injecting money into Saccos that collapsed because of limited resources,” he explained.
Also Read: SACCOs Regulator Mulls New Rules to Save Societies from Growing Loan Defaults
Strengthening SASRA
He emphasized that the key is to strengthen the Sacco Societies Regulatory Authority (SASRA).
He argued that SASRA supervises Saccos just like the Central Bank of Kenya (CBK) oversees commercial banks.
However, he said SASRA has no strength or capacity as compared to CBK.
SASRA has been underfunded, and it has no capacity to carry out regular supervision. We want this sector to be self-regulating and self-sustainable.
Also Read: How KUSCCO Will Recover Ksh8.8B for SACCOS & National Oil’s Deal with Rubis
Supervision Levy
Additionally, Oparanya said the Ministry is recommending that the levy collected from Saccos for supervision be kept by SASRA.
He revealed that Treasury CS John Mbadi is already addressing the issue to stop time-wasting.
“Levy collected from Saccos for supervision purposes should be kept by SASSRA. This money is collected by SASRA, and it has to be forwarded to the Treasury, which takes time to return it, and it is a levy, not a tax.”
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