A new set of regulations that will operationalise the Deposit Guarantee Fund (DGF) for Saccos will be ready before the August 2022 polls, according to Ali Noor Ismail PS State Department for Co-operatives, the Permanent Secretary- State Department for Co-operatives, Ministry of Agriculture, Livestock, Fisheries and Co-operatives.
This financial safety net, designed similarly to that of the Kenya Deposit Insurance Corporation (KDIC) for banks, is expected to cover Sacco depositors up to Ksh 100,000. KDIC has cemented its position in the banking industry as a major support pillar by offering appropriate risk management solutions that protect bank deposits since its inception. All Saccos will contribute to the fund as prescribed in the new regulations before Cabinet.
“We are waiting for approval from the Cabinet. The regulations are already with the AG’s office, before it goes to the legal committee on delegated legislation in parliament, and the bill brought before the house. The DGF should be operationalised before Kenya goes to the polls in August this year,” said PS Ismail. He made these disclosures recently.
There is a provision for a Deposit Guarantee Fund (DGF) in the Sacco Act that has yet to be operationalised due to some legal amendments needed in the Sacco Societies Act. Amendments have been finalised at the Attorney General’s Office.
If passed into law, members with deposits in collapsed Saccos will be compensated to the tune of KSh 100,000.
“DT Saccos will be required to pay a premium to the DGF based on the amount of deposits belonging to members that they hold. This will be specified in the regulations that are being finalised,” said PS Ismail.
Kenya’s Saccos richest in Africa, report
Savings and Credit Co-operative Societies (Saccos) in Kenya are the wealthiest in Africa, a World Council of Credit Unions’ (WOCCU) 2020 Statistical Report showed.
According to the report, the Saccos, which are popularly known as credit unions globally, control total assets valued above USD13.64 billion (about Ksh1.51 trillion). Kenya also leads in high Sacco membership in the content with 9.24 million members. Other countries in Africa with increased Sacco members include Rwanda and Ethiopia, with membership above four million.
Overall, Africa has a combined total Saccos membership of more than 40 million. The penetration of the Sacco movement in Kenya is 29.17% compared to the continent’s 14.34%.
An Economic Survey 2022 published recently by the Kenya National Bureau of Statistics (KNBS) shows the Deposit-Taking Savings and Credit Cooperatives’ total assets have increased to Ksh700.3 billion in 2021 from Ksh 630.9 billion in 2020. The growth represented an 11 per cent rise in asset size for about 175 DT-Saccos licensed and regulated by the Sacco Societies Regulatory Authority (SASRA).
Saccos remained resilient in the face of economic hardships to post growth in key performance indicators highlighted in the report for the period 2017 to 2021.
“The Sacco deposits and loans and advances increased by 25.4 per cent and 16.0 per cent to Ksh 540.6 billion and Ksh 523.0 billion in 2021, respectively,” stated KNBS in the report. In 2020, total deposits held by Saccos were Ksh431 billion.
According to the report, the Sacco sub-sector capital reserves increased from Ksh142.9 billion in 2020 to Ksh 144.028 billion in 2021. Although the performance indicators are based on SASRA’s provisional analysis, they point to a strong sub-sector that continues to play a key role in the economy.
