Saccos Show Resilience To Grow Deposits Despite Covid- 19

Established under the Sacco Societies Act, 2008 with the principal responsibility of licensing, regulating, and supervising Sacco Societies in Kenya, the Sacco Societies Regulatory Authority (SASRA) is a State Corporation under the Ministry of Agriculture, Livestock, Fisheries and Co-operatives. SASRA started its operations in 2010 upon gazettement of the Sacco Societies (Deposit-taking Sacco Business) regulations, 2010 on 18th June 2010. With the new Regulations 2020, which came into effect from January 1 this year, that aim at bringing prescribed Non-Deposit Taking SACCOs under the regulatory ambit of SASRA, the Sacco industry is set for even further growth. Moses Cheruiyot writes.

Despite the disruptive effects of COVID-19, SACCOs showed great resilience to return impressive results last year. The industry regulator SASRA rolled out a slew of measures to cushion lenders following the pandemic.

Member deposits rose 13.31 percent on average between 2019/2020 to reach KSh431.09 million, compared to 11.27 percent between the years 2018/2019.

“A number of SACCOs were adversely affected by job losses, pay cuts and unmitigated shifts in the financial priorities of households, which relegated loan repayments to the back burner. But they have shown great resilience, which ensured stability in the sub-sector.  At SASRA, we formulated and implemented a number of measures to cushion the SACCOs that we currently regulate,” said SASRA CEO John Mwaka, while issuing the performance data.”

Among the measures that SASRA implemented to cushion SACCOs against the adverse effects of the COVID-19 pandemic were the suspension of AGMs last year; online approval of SACCO’s audited accounts and allowing SACCOs to restructure member loans. The sub-sector regulator also reviewed the frequency of submission of liquidity and risk classification and asset provisioning returns.

Most adversely affected by the pandemic were SACCOs that operate in businesses that rely on local and international travel, the first and biggest victims of the initial restrictions imposed by governments the world over, including Kenya, to stem the tide of infections, mid-last year; Aviation, Hospitality, Transport and Horticulture.

Other key performance indicators in the subsector showed an upward trend, albeit at a slower pace. There was growth in assets, evidenced by an increase in the annual average growth rate of 13.31 percent in the years 2019/2020 to reach KSh630.8 million, compared to 12.41 percent in the years 2018/2019.

Gross loans, buoyed by the ease on travel restrictions in the latter half of the year and other measures to resuscitate the economy, maintained a steady rise from an average growth rate of 12.1 percent between the year 2018/2019 to 13.14 percent between the year 2019/2020, to hit KSh474.69 million.

Mr Mwaka spoke during a SACCO Leaders’ Convention at the port city of Mombasa, which ended on February 26, 2021. The regulator used the occasion to educate leaders of Non-Deposit Taking SACCOs on the SACCO Regulations 2020, whose aim is to bring such SACCOs under the regulatory mandate of SASRA.  Currently, SASRA regulates some 172 Deposit-Taking SACCOs.

The Regulations 2020, which came into effect from January 1 this year, aim at bringing prescribed Non-Deposit Taking SACCOs under the regulatory ambit of SASRA. These SACCOs include those with member deposits totalling KSh100 million and above; those that mobilise membership and subscription to their share capital through digital or other electronic payment platforms; and those that mobilise membership and subscription to their share capital from persons, “who are ordinarily resident outside the country (Kenya).” These NDT SACCOs, which SASRA estimates to be around 400, have till June 30, 2021 to register their particulars with the regulator.