Donor funding cuts tied to US President Donald Trump’s policies threaten the stability of at least 16 saccos holding Sh37.41 billion in deposits, as member exits, higher loan defaults and reduced savings loom.
The Sacco Societies Regulatory Authority (Sasra) projects that two deposit-taking saccos and 14 non-withdrawable deposit-taking saccos will be directly affected by the disruption of activities of local firms that have for years depended on donor programmes such as the US Agency for International Development (USAid).
Between March and July, President Trump dismantled USAid by gradually shutting down its programmes, dealing a major blow to thousands of organisations worldwide—including many in Kenya—that relied on its humanitarian and development assistance. The shutdown has destabilised many organisations and triggered job losses.
The development highlights the far-reaching impact of global geopolitical and policy changes on local financial stability.
Sasra says Mr Trump’s presidency, as well as the continued conflicts in Europe and the Middle East and the resultant policies are causing reduction or cessation of external or donor funding of local projects, institutions or programmes, from which several saccos draw their membership.
“The authority projects that a total of 16-regulated saccos...will be directly affected by these policy changes and thus likely to experience sharp reduction in their membership with increased member exits and demands for deposits (savings) refunds, coupled with reduction in the growth of loan assets or deterioration of the quality of loans due to potential default,” says Sasra in the latest sacco supervision annual report.
The regulator said the 16 saccos exposed to the effects of changes arising from the global geopolitical developments around the world have 72,172 members who have pooled together Sh37.41 billion deposits to build an asset base of Sh49.68 billion.
The momentum of these saccos, which had long been powered by the stable income of their members, now faces disruption.
Well-funded multilateral agencies and NGOs such as the World Bank and USAid rank among the top payers in Kenya, with employees earning an average of Sh353,048 per month by the end of last year —nearly five times the private sector’s average monthly pay of Sh80,548, according to Kenya National Bureau of Statistics data.
“These regulated saccos whose membership were principally or to a large extent drawn from donor or externally funded projects, institutions or programs, have been individually identified and appropriate supervisory advisory issued for implementation in order to mitigate against these changes,” says Sasra.
The regulator is urging such saccos to explore strategic decisions such as mergers and consolidation with other regulated saccos as well as opening of common bonds in order to diversify their membership, customer base and revenue sources.
Sasra report showed the assets of 177 deposit-taking (DT) saccos and 178 non-withdrawable deposit-taking (NWDT) saccos supervised by Sasra crossed the Sh1 trillion mark for the first time in the year ended December 2024, reflecting the growing stature of saccos in the financial sector.
