The impact of the Covid-19 pandemic on savings and credit cooperative societies (saccos) continues to be felt into the third year of the pandemic. The latest report from the sector regulator has revealed that nearly 1.2 million members slipped into dormancy and stopped making their monthly contributions.
This has been partly attributed to job losses and increasing costs of living which have made savings nearly impossible for many Kenyans.
During the year, non-performing loans stood at Sh54.7 billion, a default rate of 8.9 percent of Sh608.7 billion loan book for the 361 Saccos.
But as the saccos struggled to fight through the pandemic, it emerged that Sh3.4 billion was owed by various employer institutions to the 361 regulated saccos in operation in the country. This non-remittance menace is undermining the performance and competitiveness of saccos.
These funds would have improved the liquidity in the sacco system and provided loans to the membership besides the opportunity costs lost. The biggest offenders are public universities and tertiary colleges.
County governments and assemblies owed the third highest amount of non-remitted funds.
The irony is that the cooperative sector is a devolved function of the county government, and it is expected that county governments ought to have been at the forefront of promoting the saccos by ensuring that the members’ deductions from their payrolls are promptly remitted.
This information isn't new to the regulator, and it is time it took necessary action to protect saccos from rogue employers.