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Sacco members’ deposit security plan ready for takeoff
from Issue 39
By Kenneth Ochieng
The government is finalizing the plan to roll out the National Cooperative Policy, which seeks to establish a SACCO Deposit Guarantee Fund.
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The move follows last year’s Cabinet approval of the amendments to the Savings and Credit Cooperatives Act of 2008, paving the way for the creation of a deposit protection scheme for SACCO members across Kenya.
Co-operatives Principal Secretary, Mr. Ali Noor Ismail, said the Bill has undergone the National Development Implementation and Communication Cabinet Committee stage and is awaiting the Attorney General’s input before proceeding to Parliament.
“There needed to be some legal amendments in the SACCO society’s act for it to be operationalized. It will go through the AG’s office and then to Parliament,” Mr. Ismail stated.
The Deposit Guarantee Fund has already seen its impact in the cooperative movement since it was established through the enactment of the Kenya Deposit Insurance Act 2002.
Its mandate is to strengthen the trust that members have in respective cooperatives, through the establishment of a framework to compensate depositors in the event of a collapse of a lender.
According to the SACCO Society Regulatory Authority’s (SASRA’s) 2020 Annual Supervisory Report, deposits in the cooperative movement have grown to KSh431.5 billion.
The total deposits which represent the total savings mobilized by the DepositTaking (DT)-SACCOs increased by 13.41 percent in 2020 compared by a growth rate of 11.27 percent realized in 2019. The total number of members in the DT-SACCO system distributed among the 175-DT-SACCOs was 5.47 million persons in December 2020 compared to 4.5 million savers reported in 2019.
This increase in membership was primarily attributed to the increase in the number of licensed DT-SACCOs by three in 2020, the industry watchdog says in the latest industry supervisory report.
This means that savers across Kenya are actively putting aside their earnings for use later in life underscoring the need to protect this wealth.
“We have a lot of money for depositors in the SACCO sub-sector. Unfortunately, sometimes, even the best-managed cooperatives occasionally experience unforeseen eventualities or collapse,” said the PS.
Mr. Ismail was speaking at Harambee SACCO’s 51st Annual General Meeting in Nairobi, where he explained that the guarantee fund is a financial safety net that will provide protection to members’ deposits of up to KSh100,000 per saver.
At the moment, the government is aligning the structures to guarantee the safety of members’ deposits.
The guarantee fund will operate just like the Kenya Deposit Insurance Cooperation (KDIC) which allows savers to retrieve their money should a bank experience a failure.
Harambee SACCO Chairman, Mr. Macloud Malonza, also called for the adoption of the deposits guarantee scheme.
“We intend to create a lot of confidence in members. We are part of the team which is coming up with all the new regulations. We feel we need to move to protect members’ deposits so that there is a lot of confidence in members joining SACCOs,” said Mr. Malonza.
With the regulations now in the final stages, SACCO members can now look forward to a legally binding policy that eliminates the total loss of savings in the unfortunate event that society collapses.
