As the government inspects KUSCCO Ltd to determine whether it is undertaking regulated Sacco business violating the law, a highly placed source within its Board of Directors disclosed that there was no illegal business that the apex body for Saccos was undertaking.
“It is true that KUSCCO has a number of unique financial products, including those that deal with advocacy, risk management and a mutual fund that is partly supervised by the Insurance Regulatory Authority. KUSCCO also has a Central Finance Fund(CFF) which has been in operation for the past 34 years even before the recently enacted 2010 Sacco Societies Regulatory Authority (SASRA) regulations,” said the official who requested anonymity.
In a letter to SASRA, Simon Chelugui, Cabinet Secretary for Co-operatives and Micro, Small, and Medium-Sized Enterprises Development, expresses his suspicions that KUSCCO Limited appears to be carrying out regulated Sacco business without being licensed and or authorised to do so as required by provisions of the Sacco Societies Act No 14 of 2008.
CS has directed that SASRA leads the probe into KUSCCO affairs and sanction any of its officials found culpable.
Sources within the co-operative sector maintain that while KUSCCO has been running a Central Finance Facility for over 30 years, the now fully grown man can still make a silly mistake such as wetting the bed. This incident can attract the attention of the parent – SASRA.
Although the Sacco industry has had a central finance facility that is run by KUSCCO, the lobby group is said to have expressed reservations about surrendering this facility so that it can be better funded and accessible to all Saccos.
The fear within KUSCCO has been that relinquishing control of its central finance facility could end up crippling the organization since this platform is said to be its biggest cash cow.
Financial capital for KUSCCO’s CFF is sourced from regular deposits by Saccos, with the lobby paying interest on these deposits, which is disbursed quarterly to member societies.
The CFF is an inter-lending facility for all DT Saccos affiliated with the lobby and operates on the same principles as the Sacco Societies.
It mobilizes funds within the Sacco movement, extends the credit boundaries, and accelerates the lending capacities of DT Saccos.
To empower the youth, the KUSCCO CFF, through its Front Office Service Activity (FOSA) through the KUSCCO SASA Account, has partnered with the Youth Enterprise Development Fund in the disbursement of funds to the youth to enable them to establish income-generating activities.
KUSCCO has also partnered with USAID through Winrock International in growing the renewable energy sector by financing the purchase of clean and efficient cook stoves for SACCO members.
Analysts maintain that allowing Saccos to have an inter-lending facility could force commercial banks to lower their loan rates to compete with Saccos.
The KUSCCO CFF lacks the necessary muscle to service the needs of the entire Sacco industry.
A fully operational inter-lending facility for Sacco implies that soon, these financial societies will be able to meet their liquidity shortfalls or even do electronic funds transfers, as well as allow those with excess cash to gain immensely through the platform.
KUSCCO is a union of co-operatives that advocate their issues but also offers lending and technical services like consultancy.
