Saccos want slice of cheap housing pie
The co-operative movement is calling for a raft of measures to ensure the country leverages the sector to enhance development of affordable housing.
George Ototo, Kenya Union of Savings and Credit Co-operatives (Kuscco) Group Managing director said despite the sector putting lots of cash into real estate, regulations are not favouring the sector, referring to what he termed as discrimination in terms of mortgage relief.
“Section 15(3) of Income Tax Act takes cognisance of co-operatives societies as financial institutions but omits them from the provisions of section 15 since they are listed as fifth and fourth schedule in the Income Tax Act,” he said during the fifth Annual Sacco Leaders Convention in Mombasa yesterday.
Land purchase
Sacco societies Regulatory Authority (Sasra) data indicates that from the Sh300 billion borrowed in 2016 by 233 Saccos, Sh118 billion – 36 per cent of all Saccos loans – was used to purchase land and construct houses.
Ototo called for fast-tracking of the National Co-operative Development Policy which seeks to establish institutional framework for co-operative societies as well as deepening the deployment of ICT in the financial institutions. The proposal is currently before Parliament.
Section 15(3)b of the Income Tax Act, he added, should also amendment to allow borrowers from co-operatives to qualify for deductible allowance in respect to mortgage interests on owner occupied residential houses.
“This will eliminate discrimination against co-operatives in this section, promote competitiveness in financial sector and enforce equity which is a canon of taxation,” said Ototo.
During the meeting, savings and credit co-operative societies (Saccos) were urged to embrace technological innovations to tap into new emerging markets, in the wake of increased demand for financial services with experts warning that the sector was losing out its customer base to mobile loan firms.
Speaking during the forum whose theme was “Disrupt or be disrupted”, National chairman of Kuscco George Magutu said that increased demand for financial services from members necessitated the need for digital innovation.
