The government is considering creating specific regulations and prudential standards for small Savings and Credit Cooperative Societies (Saccos).
Cooperatives and MSME Cabinet Secretary Simon Chelugui mentioned that these regulations would be supervised by County Governments and are intended to facilitate the growth of small Saccos.
The Cooperative Act will facilitate the development of regulations, including prudential standards for startups and small Saccos not under the oversight of Sasra.
These statements were made by the CS during Kuscco’s 9th Leaders Convention held in Mombasa early this year.
The smaller but essential Saccos will be categorized into tiers based on their size and will be subjected to specific standards enforced by the County Governments.
Sasra categorizes Saccos into three classes based on their asset base: large tiered, medium-tiered, and small-tiered Saccos.
According to the Supervision Annual Report 2022, Saccos, with an asset base of Ksh5 billion and above, were classified as Tier-1 or large-tiered.
Saccos with assets ranging from Ksh1 billion to Ksh5 billion are classified as Tier 2 or medium-tiered, while those with an asset base below Ksh1 billion are categorized as small-sized Saccos.
Sasra states that Saccos, with an asset base of Ksh5 billion and above, has the capacity to allocate resources for improved marketing and investment in ICT to facilitate faster growth.
As a result, Saccos, with a lower asset base, often struggles to meet these financial obligations, which has led to the introduction of the Sacco shared services.
This platform allows Saccos to access services at subsidized rates by sharing resources with other small Saccos without incurring exorbitant costs.
However, the classification is expected to change significantly due to improved performance by several Saccos in the financial year ending December 31st, 2023.
Mr. Chelugui stated that the government is devising ways to support Saccos right from their inception to help them grow into larger entities.
Other initiatives being worked on include mentoring small Saccos and providing shared services through platforms such as Sacco Central to foster growth and stability.
By the end of the financial year on December 31st, 2023, regulated Saccos saw their asset base increase from Ksh890 billion to Ksh981 billion, reflecting a 10.2% increase.
The deposit portfolio also grew from Ksh620 billion during the review year to Ksh677 billion, marking a 9.3% rise.
Reserves increased from Ksh157 billion in 2022 to Ksh196 billion in 2023, and Non-Performing Loans decreased from 10% in 2022 to 9.0% in 2023.
Membership grew by 20,000 from 6.4 million, while the number of regulated Saccos remained at 359, and branches reduced from 620 to 603.
Regulated Saccos have played a crucial role in improving the social and economic status of their members by providing a platform to save, borrow, and engage in income-generating activities and other development projects.
Several studies have indicated that Sacco members lead financially stress-free lives as they can rely on their savings during challenging economic times or emergencies.
This is in contrast to those who do not belong to any Sacco, as they lack resources during challenging times and often have to seek financial assistance from friends and relatives.
