New alarm bells sound ahead of regulator, Saccos March truce

By Steve Umidha

Sacco Societies Regulatory Authority (SASRA) will have until mid-March this year to know whether its proposed annual levy on Non-deposit taking Saccos will suffice.

This is because the new Sacco societies (non-deposit taking business) regulations – 2020, which took effect on January 1, 2021 will have to undergo the mandatory public participation process, which is also expected to have an input of the 185 non-deposit Saccos who have since complied with the new requirements.

The proposed 0.165 per cent annual levy by Sasra on non-DT Saccos that have now come under its supervision for the first time, is expected to offer severe debate among industry players, with insiders intimating that some of those Saccos are opposed to the new charges.

Non-Deposit Taking SACCOs refer to those that take deposits from members only in the form of share capital, while deposit-taking (DT-Saccos) segment of the sub-sector is composed of those Sacco Societies which undertake both with-draw able and non-with-draw able deposits.

The industry regulator had last year given Saccos up to June 30 to comply with the new regulations whose intentions are meant to weed out rogue players duping the public.

The move will also see the industry apex body begin to monitor business activities and financial transactions of Saccos in which the total non-withdrawal deposits from members is equal to or exceeds the sum of Sh100 million.

“We will apply a similar framework used in regulating Deposit-taking Saccos. We are going to use this period until mid-March this year at the earliest on stakeholder engagements with all players including Sacco union, KUSCO, Cooperative Alliance of Kenya (CAK) and Saccos themselves to agree on some of  the proposed modalities,” Sasra’s Chief executive Peter Njuguna.

He was speaking during the company’s regional stakeholder’s consultative forum on the proposed non-deposit taking business levy order, 2022.

A growing number of Saccos were understood to be opposed to the idea of withholding the proposed levy on total revenues from members’ deposits, but both Sasra and CAK yesterday clarified that the said new charges will instead be approved from surplus of Non-deposit taking business (BOSA) entities.

“We will aim to protect our members at all cost. The idea is not to pay the levy through our members’ deposits but through the surplus accrued from the revenues generated, this has to be clear to avert fear,” said CAK’s Daniel Marube.

The regulator hopes to generate in excess of Sh137million from such proceeds if the proposed percentage levy of 0.165 remains as is, amount it says will help fund its operations.

Sasra now police a total of 360 Saccos (both DT entities and non-DT Saccos) and with a heightened oversight mandate, the oversight body yesterday admitted that it is overstretched and it’s currently relying on interns to meet its obligation.

“The national treasury seized from funding the institution nearly 4 years ago and therefore we do not rely on exchequer to fund our operations,” said Njoroge.

Sasra today regulates 175 DT Saccos and 185 non-deposit taking Saccos with 20 more non-deposit taking entities expected to comply later this year under the new regulations. Unaudited sector figures according to Sasra’s Njoroge is expected to record Sh820Billion worth of assets for the year ending December 2021.

Under the new law, Sasra will also regulate societies that mobilize membership and subscription to its share capital through virtual or digital payment platforms as well as diaspora Saccos with links to Kenya will also be policed by the regulator under the new law.