Savings and Credit Cooperative Societies (Saccos) are reeling from financial strain after employers failed to remit Sh4.2 billion of members’ contributions in 2024, exposing thousands of members to loan defaults and disputes.
The Sacco Societies Regulatory Authority (SASRA), in its latest supervision report, said the non-remitted funds hit 85 regulated Saccos, 62 deposit-taking and 23 non-withdrawable deposit-taking affecting 55,602 members.
Out of the unremitted amount, Sh3.10 billion, equivalent to 74.5 per cent, was meant to service loans and credit facilities issued to members.
SASRA warned that this failure has left loans in default, weakening liquidity and threatening the ability of affected Saccos to meet their obligations.
“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 stated.
The government and its institutions accounted for the largest portion of the pending remittances. County governments and assemblies owed Sh1.61 billion, or 46.1 per cent of the total, followed by public universities and tertiary colleges at Sh762.27 million (21.9 per cent), while state corporations owed Sh164.76 million (4.72 per cent).
SASRA has proposed policy changes to enable such amounts to be deducted directly from exchequer grants allocated to the defaulting government entities.
Despite the challenges, the report highlighted the growing role of Saccos in Kenya’s economy. The cooperative movement now contributes 6.63 per cent of the national GDP, up from 5.6 per cent a decade ago.
The sector’s assets have tripled over the same period, surpassing the trillion-shilling mark for the first time at Sh1.076 trillion by December 2024, compared to Sh301.54 billion in 2014.
Membership also more than doubled to 7.39 million from 3.08 million over the decade, while deposits rose threefold to Sh749.43 billion from Sh205.97 billion.
The report also showed strengthened financial health in deposit-taking Saccos, which hold more than 80 per cent of the industry’s assets, deposits and loans.
Their key capital-to-assets ratio rose to 17.28 per cent in 2024, above the required minimum of 10 per cent, compared to 16.07 per cent in 2023. Institutional capital-to-assets ratio also increased to 11.97 per cent from 9.1 per cent the previous year, reflecting higher retained earnings.