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Saccos profile rise in the financial sector- Treasury

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Different Saccos march during Ushirika day celebrations in Nairobi

Different Saccos march during Ushirika day celebrations in Nairobi

Kenya’s savings and credit cooperative societies (Saccos) are climbing higher the financial ladder with members savings growing to Sh. 766bn in the last financial year (2018/2019),compared to Sh. 690 billion the previous yea.

“The increase in savings is as a result of stricter enforcement of governance and accountability standards in co-operatives and the commencement of operations by the National Youth Service (NYS) Huduma Sacco,” Treasury attributes.

According to analysts, the consistent growth in Sacco deposits could also be linked to high dividend payout and an increasing number of members opting to leverage on their savings for borrowing to avoid the inconvenience of providing collateral.

Patrick Mumu is a research analyst with Nairobi-based investment bank-Genghis Capital, “All that Sacco members need to do is to save some cash and leverage on that to borrow. Also, returns on annual basis are higher for some of the Saccos than commercial banks will offer.”

Meanwhile the Treasury also noted that the firms, which had outstanding debts to Saccos paid back Sh 1.005 billion as at the end of last June 2018 compared to Sh 911 million in the previous fiscal year – an improvement of 10.3 per cent or Sh 94 million.

Several county governments are among those that owed Saccos unremitted member contributions.

According to the National Treasury, the improved clearance of arrears owed to the societies followed the introduction of specimen signatures for those remitting money through banks as well as closer tracking by the Sacco Societies Regulatory Authority (SASRA).

The update shows that most Saccos also raised their core above the required 10 per cent—reversing a trend from 2018 when the regulator cracked the whip on some of the societies for non-compliance.