Move to tame Saccos over dues welcome
Increase in number of employers defaulting on Savings and Credit Cooperative Organisations (Saccos) members’ dues has raised concerns in the country.
The delay not only affects Kenya’s dwindling saving culture which is the benchmark of the multibillion co-operative movement, but will have a serious knock-on effect on the economy.
It is an open secret that over the years, employers have been defaulting that risks, harming the nascent Sacco business.
This has hit hard the sound performance of the sector which for long has contributed to the slow growth of the Sacco subsector and further undermining efforts towards financial inclusion.
While some Saccos are among some of the best managed credit unions in the world, the performance would be better if employers allow a free flow of finances to the sector without delays.
The movement controls a substantial portion of the national savings to the tune of over 30 per cent, but with increase in defaulting institutions, this continues to deny members their hard earned sweat. This even as members’ dues have been deducted, they continue to be held by the employers as members suffer, denying them crucial services.
Experts say in the absence of tough regulations which has partly contributed to the increased defaulting of members’ dues by employers. Government agencies, counties and parastatals and some private institutions have to date not remitted over Sh4 billion and each passing day the non-remittances continue to increase.
Liquidity levels have increased as Saccos struggle with non-performing loans affecting their balance sheet and discharging their financials. Due to this, most of them can barely afford to dish out loans to members.
But the Government’s attempt through the legal framework to tame the increasing non-remittance is will hopefully tame rogue employees and help to salvage Saccos low liquidity levels.
Escalating the challenge to banks and equally applying tough measures to the defaulting institutions will equally tame the behaviour further.
Hopefully recent calls by the top echelons of the Cooperatives ministry that they will tighten rules to punish employers who do not remit dues will bear fruits.