Capital Markets

Sasra cuts statutory levy for new saccos after industry talks

Sacco Societies Regulatory Authority (Sasra) chief executive Peter Njuguna

Sacco Societies Regulatory Authority (Sasra) chief executive Peter Njuguna. FILE PHOTO | NMG

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Summary

  • Sacco Societies Regulatory Authority (Sasra) has reduced the annual fee for entities with non-withdrawable deposits of at least Sh100 million to 0.15 percent of the cash.
  • The enforcement of the new proposed levy will, however, be spread over four years, starting from 0.1 percent of the deposits next year, Sasra’s chief executive Peter Njuguna said.
  • This means that the 185 non-withdrawable deposit-taking (DT) saccos will pay at least Sh85.22 million in fees next year on the more than Sh85.22 billion deposits they control.

The saccos regulator has cut the proposed annual levy for non-withdrawable deposit-taking societies following opposition from industry players, reducing projected revenue by at least Sh55 million in the first year.

Sacco Societies Regulatory Authority (Sasra) has reduced the annual fee for entities with non-withdrawable deposits of at least Sh100 million to 0.15 percent of the cash from 0.165 percent earlier proposed.

The enforcement of the new proposed levy will, however, be spread over four years, starting from 0.1 percent of the deposits next year, Sasra’s chief executive Peter Njuguna said.

This means that the 185 non-withdrawable deposit-taking (DT) saccos will pay at least Sh85.22 million in fees next year on the more than Sh85.22 billion deposits they control. This is a drop of Sh55.40 million from Sh140.62 million under the previous rate.

The reviewed rates under the draft Sacco Societies (Specified Non-Deposit Taking Business) (Levy) Order, 2022 will rise to 0.13 percent in 2024, 0.14 percent a year later and 0.15 percent in 2026.

Sasra has also lowered the maximum levy per sacco to Sh6 million from the Sh8 million it had initially proposed, cushioning societies holding more than Sh4 billion in non-withdrawable deposits from large compliance expenses.

“We expect this (levy) to come into effect next year. What we agreed with the industry is that we shall spread it over four years and it is capped [at Sh6 million],” Mr Njuguna told the Business Daily in an interview.

“We have a final document that is validated after stakeholder engagement. We just finished going through the memorandum which we will submit to the CS [for Agriculture, Fisheries and Co-operatives] for processing where, if satisfied, he will submit it to the AG (attorney-general) for publication of a legal notice.”

The new levy follows the expansion of Sasra’s mandate to also regulate non-withdrawable deposit-taking saccos with at least Sh100 million effective January 2021 with a grace period of six months.

This was after the enforcement of the Sacco Societies (Non-Deposit Taking Business) Regulations 2020 following concerns that these entities posed a potential risk to the financial system and that their operations needed to be monitored.

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