Market News

Sasra seeks Treasury help to collect sacco deductions from State entities

DNSACCOCentral1504I (1)

SACCO Societies Regulatory Authority (SASRA) chairman Jack Ranguma during the SACCO Central(Shared Services) annual delegates' meeting on April 15, 2023, at Sarova Stanley. PHOTO | WILFRED NYANGARESI | NMG

Saccos regulator is pushing for direct deduction of Treasury’s allocation to counties, public universities and other State-linked entities to settle over Sh2.24 billion they withheld from their employees but failed to remit to the thrift institutions.

Sacco Societies Regulatory Authority (Sasra) says it is considering a framework that, if implemented, will see such exchequer-funded entities including ministries lose part of their budget cash to compulsorily settle their obligations to saccos.

Read: Sasra jumpstarts Sacco deposit insurance plan

Sasra chairperson Jack Ranguma says the fact that these employer institutions are funded by exchequer funds has made recovery of the non-remitted deductions cumbersome since it is dependent on the availability of funds and also riddled with conflict of interest.

“In this regard, the authority is considering putting in a framework to enable the recovery of such non-remitted saccos’ deductions through the National Treasury directly from the exchequer grants or funds appropriated in favour of these governmental institutions,” says Mr Ranguma.

Such a move would mean the non-remitted funds are settled as a first charge then these entities receive what is left of their allocation after this is paid.

Sasra data up to December last year shows employer-institutions owed saccos a total of Sh2.67 billion affecting 80 saccos and 66,452 individual members.

Out of the Sh2.67 billion, Sh2.02 billion or 76 percent was meant to repay members’ loans, meaning the non-remittances have fueled defaults in the sector.

“The net effect is that all these members’ loans stood defaulted, and at the same time the ability of these 80-saccos to meet their financial obligations was severely hindered,” said Mr Ranguma.

County governments and their assemblies top the list of defaulters at Sh1.35 billion or nearly half of the Sh2.67 billion non-remitted funds that was owed to Sasra-regulated saccos by the end of December. This affects 43,139 members.

Public universities and tertiary colleges follow with Sh620.52 million. That of state corporations stood at Sh143.1 million while public sector companies including water companies were holding Sh64.2 million.

Read: Sasra targets shared services platform for co-operatives

National government ministries were holding Sh27.7 million while public schools’ employees were owing saccos Sh12.5 million as that from constitutional bodies stood at Sh24.36 million.

[email protected]