Thousands at risk of loan defaults as employers fail to remit Sh4.2 billion to Saccos
Deposit-taking Saccos, which dominate the industry with over 80 per cent of assets, loans, and deposits, showed improved financial strength.
Kenya’s Saccos are facing a major financial setback after employers failed to remit Sh4.2 billion in members’ contributions in 2024, putting thousands at risk of loan defaults.
The Sacco Societies Regulatory Authority (SASRA) revealed in its latest supervision report that the shortfall affected 85 regulated Saccos, including 62 deposit-taking and 23 non-withdrawable deposit-taking, impacting 55,602 members.
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Sh3.10 billion of the missing funds, accounting for nearly three-quarters of the total, was intended to cover loan repayments.
The regulator warned that the unpaid amounts have left loans largely in default, undermining liquidity and limiting Saccos’ capacity to meet financial obligations.
“Such non-remittances of loan repayment due have also led to conflicts between the saccos affected and their members, such as contested listings in the Credit Reference Bureaus (CRBs), qualification for additional loans by the members, among others,’’ the report noted.
The government and state institutions were the main defaulters. County governments and assemblies owed Sh1.61 billion, representing 46.1 per cent of the total, while public universities and tertiary colleges owed Sh762.27 million (21.9 per cent), and state corporations Sh164.76 million (4.72 per cent).
SASRA is urging policy reforms that would allow such unpaid contributions to be deducted directly from exchequer grants to the respective government entities.
The report also highlighted the growth of the cooperative sector as a key pillar of Kenya’s economy.
Saccos now contribute 6.63 per cent of GDP, up from 5.6 per cent ten years ago. Total assets have surged past the trillion-shilling mark for the first time, reaching Sh1.076 trillion by the end of 2024 from Sh301.54 billion in 2014.
Membership grew to 7.39 million from just under 3.08 million over the same period, while total deposits climbed to Sh749.43 billion from Sh205.97 billion, reflecting increasing public confidence in Saccos as investment and savings vehicles.
Deposit-taking Saccos, which dominate the industry with over 80 per cent of assets, loans, and deposits, showed improved financial strength.
Their capital-to-assets ratio rose to 17.28 per cent in 2024, surpassing the required minimum of 10 per cent, up from 16.07 per cent in 2023. Similarly, the institutional capital-to-assets ratio increased to 11.97 per cent from 9.1 per cent the previous year, signalling stronger retained earnings and resilience.
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