CONTACTS: +254 726879488 (Mobile)
+254770 455 116 (Office)
A proposal by the National treasury targets to end a loophole in the transaction of deposit-taking Sacco business that has seen a bulk of savings and credit co-operative societies (SACCOs) collect funds from the public illegally.
All businesses registered under the acronym ‘Sacco’ will now be required by law to clearly and lawfully distinguish their mode of operations before undertaking deposit-taking business.
The treasury wants the SACCO Society Act to be amended in a move that will see only SACCOs licensed for deposit taking use the acronyms deposit taking SACCO Society (DTS) or DT-SACCO to differentiate them from other SACCOs.
CS Henry Rotich in his budget speech said the amendment of Sacco Act will also provide legal restrictions for the usage of these acronyms by other non-deposit taking SACCOs.
“With the increasing numbers of SACCOs invariably using the name “SACCO” or “SACCO Society,” it has become difficult to know the differences between a Cooperative Society, a SACCO Society, a deposit taking SACCO Society (DTS) and a non-depositing taking SACCO Society (non-DTS),” said Rotich.
The law forbids Sacco societies from undertaking tasks such as Front Office Services Activities (FOSA) like savings and deposit accounts of any description, ATM services and mobile money business.
In September last year the Sacco Societies Regulatory Authority (SASRA) warned the public from transacting fosa services with five Saccos it said were operating without valid licenses and were unlawfully collecting funds from the public with false promises.
The five Saccos listed by the regulator are Good Life Sacco Society Ltd/Fedha Micro-Finance Investment, Prevailing Sacco Society, new Milimani Sacco Society, Millionaire Sacco Kenya operated virtually and Urithi Premier Sacco/Urithi Housing Cooperative Society.
Rotich also said that the emergence and exponential growth of “Matatu or PSV SACCOs” had further fuelled the confusion in the industry.
But in an interview with The African Business Fortune, a host of Sacco CEOs said the government through the regulator should instead move towards controlling the number of Saccos coming into the market and abandon licensing new firms.
Solomon Angutsa, Chief executive of Kenya Police Sacco, said more licensing had diluted the industry contributing to the rising cases of individuals and companies using the acronym to fraud unsuspecting Kenyans.
“The move should be towards strengthening the already existing and the number coming in should be controlled, currently we are doing over 7000 Saccos against 45 commercial banks,” said Angutsa, adding that similar move being by banks should also be applied in the Sacco market.
The Central Bank of Kenya (CBK) had suspended licensing of new banks indefinitely last year in the wake of bank malpractices that hit at least three commercial banks including Dubai bank, Imperial bank and Chase bank.