SASRA to spread roll-out of annual levy over four years

REGULATION SASRA to spread roll-out of annual levy over four years

The SACCO industry regulator will phase the implementation of new annual fees on societies with non-withdrawable deposits of at least KSh100 million over four years starting January 2023.

A total of 185 non-withdrawable deposit-taking (DT) SACCOs will channel 0.1 percent of their deposits next year to the Sacco Societies Regulatory Authority (SASRA). The levy shall rise to 0.13 percent in 2024, 0.14 percent a year later, and finally 0.15 percent in 2026.

In May, the industry watchdog slashed the annual fee for the targeted cooperatives to 0.15 percent of their deposits held from 0.165 percent as proposed earlier following a consensus between stakeholders.

With the revision of rates, the 185 non-withdrawable deposit-taking (DT) SACCOs will pay at least KSh85.22 million in fees next year to the regulator on the over KSh85.22 billion deposits they control.

This is a drop of KSh55.40 million from the Sh140.62 million fees, which they would have paid under the 0.165 percent fee rate.

The introduction of the new levy implies that once a SACCO attains KSh100 million in deposits, it’ll automatically come under the regulatory controls of SASRA.

“We are liaising with the commissioner for cooperatives so that we can get the list of SACCOs that are approaching the KSh100 million mark in deposits. We use that to project and we are expecting the number to grow,” Mr. Peter Njuguna, SASRA chief executive officer told Business Daily. They are first a cooperative society and, therefore, they have to first comply with the other requirements on things such as governance, annual general meetings, and the like, he added.

So we also rely on the resolutions they make during AGMs. It does not mean that when they come under us they forget the Commissioner of Cooperatives. The two statutes apply to them, Mr. Njuguna clarified.

SASRA CEO Peter Njuguna

SASRA says that the new levy will go a long way in boosting the regulator’s financial health and efficiency in monitoring the savings and credit institutions. At the moment, one SASRA officer oversees over 30 SACCOs whereas the ideal position is between 10 and 15 units.

Over the years, SASRA has been financing operations using annual fees wired by deposit-taking SACCOs but the amount has not been enough even as allocations from the Treasury keep growing thin. The new regulation measure is expected to take SACCOs to a higher pedestal of performance and benefits to members, enabling the societies to anticipate and mitigate against risks in the industry that may potentially hinder growth.

The new levy also comes into force following the January 2021 review of SASRA’s scope to also watch over non-withdrawable deposit-taking SACCOs managing at least KSh100 million.

“The introduction of the levy is part of the normal policy position domestically and internationally where all regulatory authorities meet the cost of regulation,” said State Department for Co-operatives Principal Secretary, Mr. Ali Noor Ismail.

According to Mr. Ismail, the levy will be derived from the cooperatives’ surpluses and will introduce equity and fairness between DepositTaking and Non-Deposit Taking SACCOs with respect to levies by the regulator.

In January, the regulator published a list of 185 SACCOs that were licensed to undertake specified Non-Deposit Taking business category following the implementation of new regulations in 2020.

“The government intends to develop regulations for other categories, housing, and investment cooperatives. We want to create trust so that members of the public know their money is safe. There is a lot of potential that needs to be tapped,” said Commissioner of Cooperatives, Mr. David Obonyo.