There have been increasing complaints about savings and credit cooperative societies (SACCOs) in Kenya blocking members from withdrawing their deposits and leaving. The Competition Authority of Kenya (CAK) received at least eight cases of SACCOs refusing to release member deposits in the year ending June 2023 despite receiving a 60-day withdrawal notice.
In some cases, such as KICO Sacco, the CAK intervened and forced the SACCOs to refund member deposits. However, investigations are still ongoing regarding other cases, such as Fountain Enterprises Programme (FEP) and Post Mail Saccos.
SACCOs’ by-laws require that members must issue a 60-day notice if they decide to exit. After that notice period, the SACCO is required to refund the member their due deposits. The refusal by SACCOs to refund members their savings when they seek to exit is a sign of poor administration. For instance, an investigation involves a member of Kencom Sacco who claims that the SACCO failed to honor the 60-day exit notice.
According to the Sacco Societies Regulatory Authority (SASRA) Annual Supervision Report released in 2023, the most predominant nature of complaints remains the claims for refunds of savings and deposits or share transfers, accounting for 53.99% of the total complaints in 2022.
Regulations for DT-SACCOs and NWDT-SACCOs require that members’ deposits (savings) refunds be executed within sixty days from the date of notice of withdrawal from membership thereof. Some SACCOs, however, do not comply with these legal requirements, bringing inconvenience and hardships to their members.
Despite some complaints being resolved, SASRA states that the main reason for the delayed settlement of claims for refund of savings and deposits of members within the prescribed time is the perennial liquidity challenges faced by some financially distressed Regulated SACCOs. The Authority urges SACCOs to put in place adequate liquidity management plans to cater to unexpected applications by members for a refund of their savings and deposits to avoid backlashes and supervisory enforcement actions associated with the failure to make timely refunds of savings and deposits. The situation may also result in panic withdrawals and liquidity runs by other members.
