The Sacco Societies Regulatory Authority (Sasra) wants accounting officers of universities, counties and company directors to face fines and jail time if they fail to release overdue statutory deductions owed to saccos that now total Sh5.04 billion.
Sasra chairman John Munuve said the regulator would propose a change in the law to outlaw holding onto member’s contributions and debt repayments after non-remitted funds jumped 30 percent from Sh3.8 billion last year.
He said saccos are finding it difficult to fulfill their obligations due to the delays in making remittances.
“In this regard, the authority entreaties the National Co-operative Policy Ministerial Implementation task force, which was appointed in December 2020 to overhaul the legal framework for the recovery of such non-remitted funds owed to saccos by various employer-institutions, including criminalising intentional failure to remit such deductions,” said Mr Munuve.
Counties are yet to make good legacy non-remittances inherited from the defunct county, municipal and town councils while State agencies and universities are also lagging in payments.
Sasra said at Sh4.31 billion, loan repayments constitutes the highest proportion of the non-remitted funds owed to deposit-taking saccos.
Meanwhile, saccos have been hit by a surge in loan defaults, from Sh25.7 billion in 2019 to Sh39.8 billion last year as most employees lost jobs or took pay cuts in the fallout of Covid-19.
Public universities and tertiary colleges are the greatest culprits in failing to timely remit the deductions due to Saccos at Sh2.95 billion as of September 2020 compared to Sh2.86 billion as of September 2019.
Private firms and institutions owed the second-highest amount of non-remitted deductions at Sh850 million in September 2020 from Sh480 million a year earlier.
The amount owed by the ministries, State agencies and constitutional commissions increased to Sh580 million as of September 2020 from Sh37 million in 2019.
There has been an increased push in remitting workers contributions following years of defaults among private firms and State bodies that have accumulated billions of debts.
The Kenya Revenue Authority recently got the power to attach bank accounts of employers who fail to remit staff contributions to pension schemes after the National Assembly amended the Retirement Benefits Act to authorise the taxman to pursue defaulters on behalf of pension funds.