By Tim Okundi
Sacco members are saving less as the rising cost of living continues to affect their pockets. Various co-operative sector stakeholders have expressed their concerns noting that the challenging economic times have pushed many members to the corner.
Speaking recently, the Sacco Societies Regulatory Authority (SASRA) Chief Executive Officer (CEO) Peter Njuguna said few are savings as their primary concern is providing essential commodities to families.
Despite the fact that the Sacco industry is demonstrating resilience in the face of the Covid-19 pandemic, the rise in food prices Mr Njuguna says has aggravated the economic stability of many citizens.
“The dwindling savings within the sector may water down the gains made in the sector,” he said.
Small tiered Saccos are most likely to be affected by the emerging challenges, which have been made worse by the Russia-Ukraine war.
The Annually Supervision Report 2020 released last year by SASRA showed that 23 Deposit Taking (DT) Saccos controlled 61.64% of the total deposits’, while the 53 DT-Saccos had a share of 30.61%. Ninety-nine DT-Saccos only have a market share of 7.76%.
According to the Sacco sub-sector regulator, the average growth rates in total deposits equally showed a similar trend, with the wealthiest DT-Saccos attracting additional savings faster than the small and medium tier DT-Saccos.
“The average growth rate in total deposits for DT-Saccos with total deposits above Ksh 5 Billion was 11.32% compared to an average growth in deposits of 10.61% for the DT-Saccos with total deposits of between Ksh 1 Billion and Ksh 5 Billion,” said Njuguna.
The DT-Saccos with total deposits below Ksh 1 Billion reported the lowest growth rates over the three years, with a 7.51% growth last year.
“Although the recovery in terms of numbers and savings has been coming up since last year in 2021, new emerging challenges might just affect the gains made,” he said.
Addressing co-operative leaders meeting to Njuguna called upon Sacco managers to be wary of the looming crisis, urging them to use data to guide them overcome the challenge of the high inflation rate.
“Sacco’s savings are essentially mobilized from the household which is the basic unit of economic development. With the disruption of macroeconomic environment businesses and households incomes are greatly affected, leaving little for savings,” he said.
However, he expressed his confidence that the sector will remain resilient, as has been the case before. “Saccos are still playing a leading role in financing small and medium enterprises by offering affordable credit facilities,” he said.
Majority of Saccos opened their common bond strategy allowing new members to join them.
Njuguna said that the non-traditional members are contributing high deposits than the original members, hence there is need for leadership in Saccos develop good strategies to accommodate them.
Cooperative Alliance of Kenya (CAK) Chief Executive Officer Daniel Marube said that although Covid-19 battered the economy, the co-operative movement has remained stable.
“However, most members cannot foot transport, food and rent bills, among other needs, which definitely disrupts their Sacco savings,” said Mr Marube. He noted that most parents would borrow to pay school fees.
Hazina Sacco National Chairman Evans Kibagendi noted that the economy, which had started rebounding, is now being affected by the rising cost of essential commodities.
“Our members have been affected by constraints in taking loans because of job losses. However, Saccos have readjusted their business model while redesigning their products an d services to reflect the current economic situation,” he said. Mr Kibagendi said government initiatives to support the sector are also helping
co-operatives remain strong.
Kenya Police Sacco National Chairman David Mategwa said most Saccos, especially agriculture-based, are most likely to experience reduced savings from members.
“If a member has been contributing Sh2, 000 and the situation continues deteriorating, the depositor will be forced to reduce the contribution,” said Mategwa.
