Capital Markets

Saccos want remittance defaulters forced to pay

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Kuscco Limited group managing director George Ototo. PHOTO | SALATON NJAU | NMG

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Summary

  • Kuscco wants universities, county governments, water companies and fresh produce entities compelled to release statutory deductions owed to saccos totalling Sh3.8 billion.
  • Kuscco managing director George Ototo said saccos were finding it difficult to fulfil their obligations due to the remittance deficit.
  • This is even as they report rising defaults by borrowers, many of whom have lost their jobs due to the Covid-19 pandemic.

The Kenya Union of Savings and Credit Co-operatives (Kuscco) wants universities, county governments, water companies and fresh produce entities compelled to release statutory deductions owed to saccos totalling Sh3.8 billion.

Kuscco managing director George Ototo said saccos were finding it difficult to fulfil their obligations due to the remittance deficit. This is even as they report rising defaults by borrowers, many of whom have lost their jobs due to the Covid-19 pandemic.

Mr Ototo said county governments were yet to make good legacy non-remittances inherited from the defunct county, municipal and town councils.

“It is important to understand that when saccos are denied cash, they cannot create employment and pay taxes. This withholding of sacco funds is destroying the sector and the general economy,” he said.

“Saccos are meant to maintain a liquidity ratio as set by the Saccos Regulatory Authority (Sasra) and we wonder how we will manage liquidity when the offending entities are sitting pretty on the funds and are now using the same to finance own operations.”

He, however commended the University of Nairobi and Kenyatta University for releasing principal amounts owed to Chuna and Kenversity saccos, respectively adding that mitigation measures need to be put in place to avert instances where saccos are forced to close down such as it happened to Sukari sacco and Nitunze Sacco a year ago.

“Deductions cannot be considered gratuitous contribution and there is no justification whatsoever. We are calling out for a more punitive legal framework against such perennial defaulters, particularly the public sector,” said Mr Ototo.