Public institutions owe Saccos Sh4.2 billion, according to the Kenya Union of Savings and Credit Co-operatives (Kuscco).
The amount is from unmerited monthly deductions from members of various Saving and Credit Cooperative Societies as at last June.
The main culprits are universities, county governments, water companies and fresh produce entities, said (Kuscco). The umbrella body draws membership from all Saccos countywide.
Kuscco managing director George Ototo said non-remittance to Saccos has resulted in liquidity challenges limiting provision of services to members.
Kenya currently has 175 deposit-taking Saccos and 185 non-deposit-taking Saccos.
“Some Saccos are unable to disburse loans adequately, leading to loss of member confidence. In this regard, we would compel institutions like universities, county government and others to release over Sh4.2 billion owed to Saccos,” said Ototo.
He was speaking during the 7th annual Sacco Leaders Convention in Mombasa.
The four-day convention, which began on Tuesday, brings together over 800 Sacco leaders who will explore various ways of working together under the theme ‘Saccos Collaborate: The Clock is Ticking’.
Ototo further called on county governments to pay pending non-remitted funds inherited from the defunct county, municipal and town councils.
He called on Saccos to ensure that they choose a core-banking platform that provides appropriate services as they embark on a digital transformation journey.
“Choose a versatile, flexible system, accessible from any device, anywhere and at any time. This will enable Sacco officials to check and approve transactions from wherever they are, without necessarily going to the Sacco offices physically,” he said.
Ototo said systems that offer mobile banking platforms are an added advantage as they enable members to transact from any location and at any time, thus increasing efficiency.
Kuscco is currently engaged in the Technology and Innovation for Financial Inclusion (Tifi) project, an SME lending framework funded by the USAID and implemented under the Co-operative Development Program (CDP).
The project is a partnership between Council of Credit Unions and Kusco to enhance lending to MSMEs, while reducing credit risks.
Kuscco national chairman George Magutu called on Saccos to collaborate in order survive and grow in the highly competitive financial sector.
“The main catalyst in this agenda is the member customers and their rapidly evolving needs and expectations. This calls on Saccos to collaborate within and without the sector, to efficiently meet these needs,” said Magutu.
He said Saccos have an advantage since they lend to members using a broader loan appraisal process based on character, capacity to repay, conditions and capital, as opposed to using collateral as the only lending criteria.
“The Saccos underwrite quality loans by making sound lending decisions. This will position Saccos as a one-stop-shop for MSME financing,” he said.
The Commissioner of Cooperatives David Obonyo said the government will continue creating a conducive environment for the growth and development of cooperatives in the country.
He said Sacco boards need to explore sustainable ways to overcome challenges such as investment in non-core activities, non-remittances by employers, low adoption of ICT and cyber-crime.
