DEPOSIT TAKING SACCOS HAVE COME OF AGE

Kenya’s co-operative movement is quite vibrant. It is ranked the top in Africa and seventh globally.  Given its huge potential in unlocking economic opportunities for millions of households across the country, the government is very keen on enhancing its   growth. In that regard, the Cabinet approved  the  2023 Co-operative Bill in October last year. It  is currently before Parliament. Among other things, the Bill is aimed at strengthening the governance framework for co-operatives and safeguarding the members’ funds through enhanced regulation and supervision.

 Standing  out in this movement are the   deposit taking   savings and credit co-operative societies ( DT  Saccos).  They are  emerging as a force   to reckon with in Kenya’s financial sector. Going by their results in the 2023 financial year,  DT Saccos  are fast growing in membership and profitability. Undoubtedly,  they  are becoming more and more attractive to members from all walks  of life   due to their innovative products and  services, democratic  governance and  open door policy.

One common feature among the giant  tier one Saccos in the country is that almost all of them started as  small outfits – with a handful members , limited   capital and skeleton  staff.  Nevertheless, through sheer hard work, focus and  customer friendly business models,  they have been able to scale up in a phenomenal way. It is worth noting  that DT Saccos pay dividends  on share capital and interest on non-withdrawable deposits to their members every year, based on their financial performance.  Against   that  background, many members who are keen on achieving  financial success  have joined them.

Significantly,  plans are underway  to establish a Central Liquidity Facility  through  which Saccos will be admitted into the national  payment  system.  This is in line with the  government’s financial inclusion agenda.  According to the 2022 Sacco Supervision Report by the Sacco Societies Regulatory Authority ( SASRA), the total assets of the regulated Saccos in Kenya as at 31^st December 2022 was Kshs. 620.45 billion. The total deposits on  the  other  hand  stood at Kshs. 620.45 billion. This is another indication that the sub-sector has come age.

As  the DT Saccos continue strengthening their governance structure, rolling out innovative products, digitizing their business models and opening more branches in line with their expansion agenda,  they are bound to register even better results. They therefore need more support from the government and   its agencies at both the national and county  levels. The options  of  charting a different path are limited.