SACCO members hit by 4 per cent payout cuts in wake of Sh13.3 billion KUSCCO heist
The audit exposed a pattern of financial malpractice, including book tampering, large-scale theft by senior executives, bribery, suspicious bank withdrawals and conflict of interest, where procurement contracts were awarded to companies linked to top officials.
Savings and Credit Cooperative Societies (SACCO) members are feeling the pinch after suffering reduced returns on their savings and investments for the financial year 2024.
The dip in earnings follows the exposure of the Sh13.3 billion fraud scandal at Kenya Union of Savings & Credit Co-operatives (KUSCCO), which holds and manages funds from various SACCOs.
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A forensic audit by PricewaterhouseCoopers (PwC) conducted early this year uncovered fraudulent activities at KUSCCO, amounting to Sh13.3 billion, which rendered the umbrella body insolvent by Sh12.5 billion and put at risk Sh24.8 billion in deposits collected from SACCOs across the country.
The audit exposed a pattern of financial malpractice, including book tampering, large-scale theft by senior executives, bribery, suspicious bank withdrawals and conflict of interest, where procurement contracts were awarded to companies linked to top officials.
According to the latest annual report by the SACCO Societies Regulatory Authority (SASRA), SACCOs slashed both dividends and interest payouts for the year 2024 as they absorbed the financial shock.
The average dividend rate paid on member share capital fell by 4.2 per cent, from 10.92 per cent in 2023 to 10.46 per cent in 2024.
Similarly, the average interest on member deposits dropped by 4.16 per cent from 7.45 per cent in 2023 to 7.14 per cent in 2024.
This marks the first decline in member payouts in three years, a significant reversal for an industry that has long been seen as a stable and attractive savings channel for millions of Kenyans.
“The decline was largely as a result of increased regulatory pressures on regulated SACCOs towards retention of surpluses to build institutional capital, rather than increased payout,” the regulator said.
At the segment level, the analysis shows Non-Withdrawable Deposit-Taking SACCOs (NWDT-SACCOs) paid the lowest rate in dividends on members' share capital at 10.37 per cent, down from 11.06 per cent in 2023.
This compares to Deposit-Taking SACCOs (DT-SACCOs), which paid 10.54 per cent, also down from 10.79 per cent in the preceding year.
Another key highlight of the report is the quality of loans and credit advances issued by SACCOs, which also serves as a critical international financial soundness indicator (FSI).
The overall analysis shows there was a marked improvement in the quality of loans and credit advances issued by the regulated SACCOs in the year under review.
The report says 86.71 per cent of the total loans performed in accordance with the contractual agreements, compared to 86.33 per cent of the loans which were reported as performing in accordance with the contractual agreements in 2023.
Additionally, the proportion of loans and credit advances which were classified under the watch category and thus deemed to be outstanding for between one (1) day and thirty (30) days also dropped to 4.90 per cent from 5.22 per cent in 2023.
The non-performing loans (NPL) ratio, made up of the loans classified under the substandard, doubtful and loss category to gross loans for the industry, registered a marginal improvement to 8.39 per cent compared to an NPL ratio of 8.45 per cent in 2023.
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