Small-tiered Saccos growth shrinks
By Co-op News
A worrying trend is emerging in the Sacco sub-subsector as large-tiered Deposit-Taking (DT) Saccos continue to dominate the market, edging out small-tiered DT- Saccos.
The latest Sacco Societies Regulatory Authority (SASRA) 2020 Annual Supervision Report shows the average growth rates of the small tiered DT-Saccos with total assets below the Ksh 1 Billion have continued to shrink over the three years comparative period resting with an average growth rate of 5.23% in 2020.
SASRA warns that although the shrinking of the market share is a natural function of market dynamics, if the trend continues, then the market share of the small tiered DT-Saccos is likely to be significantly reduced, which is likely to impair their competitiveness and sustainability.
Peter Njuguna, Acting SASRA CEO, said 34- large tiered DT-Saccos with total assets above Ksh 5 Billion controlled 72.03% of the total assets’ portfolio of DT-Saccos; while the 57-mid-tiered DT-Saccos with total assets of between Ksh 1 Billion and Kshs 5 Billion held 22.76% of the total assets’ market share.
“This leaves the majority 84-small tiered DT-Saccos with total assets of below Ksh 1 Billion to share a paltry 5.21% of the remaining total assets’ share,” he states.
The same thing is replicated in the market share of the total deposits, with 23 DT-Saccos controlling 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%.
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 Kshs 5 Billion was 11.32% compared to an average growth in deposits of 10.61% for the DT-Saccos with total deposits of between Kshs 1 Billion and Kshs 5 Billion,” said Njuguna.
The DT-Saccos with total deposits below Kshs 1 Billion reported the lowest growth rates over the three-year periods with a 7.51% growth last year.
Overall, DT-Saccos braced the pandemic to register impressive growths in crucial performance measurement parameters of assets, deposits, and gross loans. The total assets within the DT-SACCO system grew to reach Kshs 627.68 Billion in 2020 from Kshs 556.71 Billion recorded in 2019. This was a 12.75% increase in 2020 compared to a 12.41% increase over a similar period in 2019.
According to SASRA, the DT-Saccos’ total assets accounted for 6.11% of the national GDP in 2020, increasing from 5.72%.
The large-tiered DT-Saccos registered a faster growth rate than the rest of the pack between the 2017/2018 and 2019/2020 periods, posting 12.20%, 13.56%, and 11.11% growth in 2017/2018, 2018/2019, and 2019/2020 periods respectively.
The 49-Farmers based DT-Saccos controlled the largest chunk of membership at over 41% but only commanded a market share for total assets and total deposits of 10.20% and 9.87%, respectively, in 2020.
Thirty-seven Government-based DT-Saccos and the 43-Teachers based DT-Saccos continued to control the largest market share of both the total assets and total deposits’ portfolios within the DT-SACCO system according to SASRA annual supervision report.
“The 37-Government based DT-Saccos controlled the largest proportion of the total assets and total deposits market share at 37.18% and 37.43% respectively; followed by the 43-Teachers based DT-Saccos at 36.29% and 35.69% respectively,” reads the report.
The 24-Private sector-based DT-Saccos and the 22-Community based DT-Saccos have the smallest total assets and total deposits market share below 10 percent.
DT-Saccos income hits Ksh 86.04bn.
The total income among the 175-DT-Saccos grew to reach Kshs 86.04 billion in 2020 from Kshs 79.88 Billion recorded in 2019, representing a 7.71% increase.
SASRA said the earnings were generally generated from the loans, which accounted for 85.77% of the total income reported.
About 35.58% of the total income amounting to Kshs 30.61 Billion was paid as interest on deposits to members.
Mwalimu National DT SACCO remains the largest DT-SACCO in the country by total assets’ size, having reached Kshs 57.73 Billion in 2020.
Trans-Nation Sacco registered the highest growth in total assets with a growth rate of 29.57% in 2020, moving from position 31 in 2019 to position 26 in 2020 among the large-tiered DT-Saccos.
Ushuru Sacco topped the list of mid-tiered DT-Saccos with a total assets’ portfolio of Ksh 4.85 Billion, while Mafanikio Sacco topped the list of small-tiered DT-Saccos in 2020 with a total assets base of Ksh 0.97 Billion.
Tower Sacco maintained the fastest growth rate in terms of deposits, with a growth rate of 22.69% compared to 31.83% in 2019. The other DT-Saccos which recorded high growth rates in their total deposit portfolios included Imarisha Sacco 17.65%; Boresha Sacco 15.79%; and Cosmopolitan Sacco 14.50%.
