Oparanya Issues Tough New Rules on Sacco Dividend Payments.
Cabinet Secretary for Cooperatives and MSMEs, Hon. Wycliffe Oparanya, has announced new conditions that Saccos (Savings and Credit Cooperative Societies) must meet before they can distribute dividends or interest to their members.
During the launch of the SASRA Annual Supervisory Report for 2024, Oparanya warned against “cooking the books,” which refers to falsifying financial records. He stressed that Sacco Societies must not borrow externally to pay dividends while ignoring statutory reserve requirements. Oparanya cautioned that some Saccos are engaging in risky financial practices to outcompete others by offering unrealistic returns.
He stated, “Going forward, no Sacco will be allowed to declare dividends unless it has a genuine surplus, meets capital adequacy thresholds, and has made full provisions for statutory reserves.”
The Cabinet Secretary has directed SASRA (Sacco Societies Regulatory Authority) and the Commissioner of Cooperatives to enforce these new rules strictly. Additionally, any Sacco seeking to borrow funds externally must now obtain prior written approval from the Commissioner.
According to the SACCO Supervision Annual Report for 2024, there was a decline in the average rate of dividends paid by regulated Sacco Societies on their members’ share capital, dropping to 10.46% in 2024 from 10.92% in 2023. This decrease is primarily due to increased regulatory pressures on Saccos to retain surpluses to build institutional capital rather than increase payouts. Notably, this marks the first reduction in the dividend rate on members’ share capital in three years.
The SASRA analysis further revealed that NWDT-SACCOs paid the lowest dividend rate on members’ share capital at 10.37%, compared to the 10.54% paid by DT-SACCOs. Both segments of regulated Sacco societies experienced a reduction in the dividend rates, with DT-SACCOs paying 10.54% in 2024, down from 10.79% in 2023, and NWDT-SACCOs paying 10.37%, down from 11.06% in 2023.
A similar trend was observed in the interest rebates on members’ deposits during the year, where the average interest rate paid by regulated Sacco societies was 7.14% in 2024, down from 7.45% in 2023. At the segment level, both DT-SACCOs and NWDT-SACCOs paid an average interest rate of 7.14% on their members’ deposits in 2024. This figure represents a decrease from the 7.70% paid by DT-SACCOs in 2023 and a drop from 7.20% for NWDT-SACCOs in the same period.
