Recently, a newspaper headline screamed that 25,000 Saccos risk closure over missing audit reports, leaving many wondering: is my Sacco among them?
The majority of the Saccos likely to face closure are dormant and often fail to comply. These are not Saccos under SASRA supervision, but mainly small Saccos offering BOSA (Back Office Service Activity) services.
SASRA regulates fewer than 400 Saccos, comprising both deposit-taking and non-deposit-taking entities.
According to Patrick Kilemi, PS for the State Department of Cooperatives Development, it is estimated that around 30,000 cooperatives have been registered since independence. Of these, only about 5,000 annually hold general meetings and file their audited returns with the Commissioner of Cooperatives in the prescribed format, as required by Cap 490 of the Laws of Kenya.
The majority of these Saccos risk deregistration for failing to file audited accounts, putting more than Sh1.2 trillion in member deposits at risk, according to a local daily. The State Department for Co-operatives confirms that only 5,000 of nearly 30,000 Saccos submit financial reports.
Recently, the Ministry of Cooperatives and MSME Development also announced a temporary moratorium on the registration of new Savings and Credit Cooperatives (Saccos). However, this directive will not impact other forms of cooperatives.
According to Cabinet Secretary Wycliffe Oparanya, this order is intended to allow the ministry to evaluate existing registered Saccos, assess their performance, and determine their viability.
“The moratorium on registration pertains specifically to Saccos due to their financial mediation role, which involves collecting deposits from the public and providing loans. Government intervention is necessary to protect these deposits,” Oparanya explained. He added that registered Saccos that are found to be inactive will be deregistered and liquidated by the Commissioner for Cooperatives, as mandated by law.
What You Need to Know About the Government’s New Crackdown
- No New Saccos: CS Wycliffe Oparanya issued a temporary moratorium (ban) on registering new Saccos. This is to allow the ministry to evaluate the performance of current ones.
- The 25,000 Number: Reports state that 25,000 Saccos risk closure. PS Patrick Kilemi clarified that out of 30,000 registered co-ops, only about 5,000 are filing their annual audits as required by law.
- Who is at Risk? The majority of Saccos facing closure are dormant or small entities offering basic back-office services.
- Is My Money Safe? Most large, active Saccos are regulated by SASRA. SASRA supervises less than 400 of the largest Saccos (both deposit-taking and non-deposit taking). The current purge targets the thousands of inactive, smaller societies that are not complying.
