SASRA proposes 0.165% new levy on Non-WDT Saccos

(By Kenneth Ochieng)

SACCOs Societies Regulatory Authority (SASRA) has released a regulatory impact report that seeks to have Non-Deposit Taking SACCOs pay levies on their now-withdrawable deposits at a rate of 0.165%.

The report is in accordance with the SACCO Societies (Non-Deposit Taking Business) Regulations 2020, that requires the authority to impose a levy on Non-DT SACCOs. At the same time, Deposit -Taking SACCOs will be paying a levy rate of 0.175% on their total deposits.

According to section 15(1) of the Act, the authority may impose a levy on the deposits held in DT SACCOs or as may be determined by the authority. From the foregoing, SASRA believes that the new rate is subject to a maximum of Kshs 8 Million per Non-WDT-SACCO.

“Considering the fact that the DTSACCOs’ maximum levy payable is fixed at Kshs 10 Million, coupled with the level and intensity of DT-SACCOs’ activities being much higher than that of the Non-WDT-SACCOs, the maximum amount of levy payable by Non-WDT-SACCOs should be less than the latter’s,” read the report.

With no minimum set for the DTSACCOs, SARSA sees it quite rational that Non-WDT-SACCOs be treated equally, operating on no minimum amounts. Moreover, the minimum amount set will likely affect Non-WDTSACCOs with small deposit bases, requiring them to remit more than their shares.

Moreover, Non-WDT-SACCOs with higher maximum amounts are better placed financially since their levies will constantly increase annually, compared to those SACCOs with a maximum limit of Kshs 8million. Reasons for the levy The proposed levy order, which has been prepared according to the state’s guidelines on regulatory agency funding, is based on policy justifications for the imposition of levies on the SACCOs.

SASRA has been licensing, regulating and supervising only the DT-SACCOs since its inception in 2020. As at June, 2021, the authority had registered a total of 175 DT-SACCOs. However, as at December, 2021, the Authority had also licensed and embedded in its supervisory framework, a total of 169 NWDT-SACCOs. This has engineered a new spirit that seeks to ensure equity and fairness between DT-SACCOs and the Non-WDT-SACCOs on cost sharing

This is in line with the Saccos’ fiscal and budgeting years. Moreover, it relies on the saccos’ Financial Statements that are usually finalized on, or before 30th April every year.

of the associated regulations and supervisions.

Principally, the new levy order will activate section 15(1) of the regulator’s Act that empowers it to impose the SACCO societies levy, while ensuring the country’s financial stability through effective supervision of the SACCO industry.

The authority also considers both the direct and indirect impacts of the levy order, majorly benefiting the funding of the supervision and regulations of the Non-WDT SACCOs. This will, among other, enhance financial stability, increase market confidence, protect members’ deposits, and facilitate policy formulation.

Levy due date To determine the deadline of the imposed levy, SASRA relies on the government’s annual budgetary timeline which runs from 1st July to 30th June every year.

This is in line with the SACCOs’ fiscal and budgeting years. Moreover, it relies on the SACCOs’ Financial Statements that are usually finalized on, or before 30th April every year. Therefore, the regulator proposes to use the SACCOs’ Financial Statements calendar year.

Meanwhile, the proposed levy order has reached a critical stage requiring public participation. It contains the necessary information that details the appraisal of the potential impacts of the levy on individual SACCOs, including cost benefit analysis.

“It is now time to impose a SACCO Societies Levy upon the NWDTSACCOs in accordance with section 15(1) of the Act,” read the signed report.

Therefore, the authority accepts feedback and comments from all stakeholders, mainly the Non-WDTSACCOs, to consider the report and the proposed Levy Order availed to them in the report. This participation will hereto provide the authority with appropriate views, comments, or feedback that it may use against decisions around the matter. Those participating have a deadline of up to 25th of February, 2022.