By CO-OP NEWS
Co-operative Principal Secretary Ali Noor said the Cabinet had approved the establishment of Central Liquidity Funds and the Share-technology platform.
The government is also operationalizing the Deposit Guarantee Fund to protect members’ savings when societies collapse.
The PS revealed 250 non-deposits taking Saccos with deposits above Ksh 100 million will now be under the watch of the Sacco Societies Regulatory Authority (SASRA).
“The task force appointed by the Cabinet Secretary to fast-track implementation of the National Co-operative Policy is concluding its assignment, and it is expected to give recommendations that will overhaul co-operative management,” said Noor.
The actualization of the Central Liquidity Fund is now a reality with parliament expected to approve it after many years of speculation.
The fund enables Savings and Credit Cooperative Societies (Saccos) to lend to each other.
This move will create a robust cooperative culture where Saccos can lend and borrow to spur each other’s growth, decreasing their dependency on borrowing against high loan rates issued by external, non-co-operative lenders.
The central fund will be well structured and secure, thus boosting Saccos’ efficiency in lending to their members and more competitive rates while dealing a blow to predatory lenders.
More than 55 Saccos have indicated their interest in joining the fund to lessen the burden of costly external borrowing from banks. It is estimated that Saccos borrow to the tune of Ksh 2 billion from local banks that charge high interest rates.
Commissioner of Cooperatives Geoffrey Nja’ngombe said all legal mechanisms are in place to ensure the fund is operationalized, ending the long wait in the Sacco subsector.
“We have a guideline on bringing Saccos together and we already have policies in place concerning this and they will be going to Cabinet next week for approval,” said Nja’ngombe.
It is expected that Central Liquidity Fund will be worth Sh100 billion, which Saccos can draw when they need to. In addition, it will elevate Saccos at the same level as banks by enabling them to access the National Payment System.
President Uhuru Kenyatta in 2019 directed the establishment of the Sacco Central Liquidity facility to be fast-tracked, noting it will contribute to the growth of Saccos.
“I am delighted to report that SASRA working through a multi-agency team developed a legal framework on the establishment and regulation of a Central Liquidity and Shared Technology platform for Sacco Societies,” said Peter Munya, Cabinet Secretary, Ministry of Agriculture, Livestock, Fisheries, and Cooperatives.
The CLF will facilitate cooperation amongst Saccos through the pooling of liquidity and connected services to enhance SACCOs’ financial soundness and competitiveness as deposit-taking institutions.
He said that over 50 Saccos worked with the Regulator on this initiative and have already developed Bylaws to govern the CLF and shared services business amongst themselves.
Deposit-taking Saccos will benefit first from the fund before other regulated Saccos are brought on board.
Experts say there is a need for the cooperative movement to amalgamate resources to be more competitive in the financial sector.
Daniel Marube, Cooperative Alliance of Kenya Chief Executive officer, said the central liquidity facility and a shared ICT platform would strengthen Saccos.
He said that Saccos with excess cash can lend to others at affordable interest rates under the liquidity fund.
“Cooperative societies are growing and the demand for credit and loans from members is also growing from time to time,” said Marube.
He said the fund places Saccos on an excellent platform to compete with the banks.
The Sacco Deposit Guarantee Fund (DGF) is also set to be established after the government developed legal amendments that are awaiting parliament approval. The amendments were presented to the National Treasury for inclusion in the Financial Bill for 2021.
Sacco Societies Regulatory Authority (SASRA) is currently working with the Saccos on the nomination of representative Trustees for my appointment to the DGF Board of Trustees by June 2021.
The Board of Trustees is the governing organ for the DGF overseeing its operations.
