Kenyans borrowed more than they saved in saccos, compelling the member-managed entities to borrow Sh31 billion from commercial banks to bridge the loan demand.
This was an increase from the Sh26 billion borrowed the previous year.
According to a newly-released report, Sh373 billion was loaned out to Kenyans against Sh342 billion savings in the past year. The 2018 loans were 12.7 percent higher than the Sh331 billion lent out in 2017.
The growing popularity for sacco loans arises from a perception that they are cheaper with less conditions for collateral compared bank loans.
Industry, Trade and Co-operatives Cabinet Secretary (CS) Peter Munya said Saccos must intensify membership recruitment drives to boost their liquidity.
“We must enhance member recruitment drive to reverse the trend where our saccos borrow loans and pay interest on the same. For saccos, loaning out own money at an affordable interest is beneficial since earnings made will be paid back to members as dividends,” Mr Munya who released the Sacco Societies Sectoral Report on Lending last week said.
During the period, the value of sacco assets grew by Sh56 billion to stand at Sh498 billion in 2018, up 12.6 per cent compared to the previous year that reported assets worth Sh442 billion.
The CS said deposits grew to Sh342 billion, a 12.1 percent rise from an earlier Sh305 billion reported in 2017 indicating growing interest in the sacco movement.
Mr Munya said he was awaiting conclusion of a feasibility study on co-sharing of platforms and services to help small saccos save on costs of operations for the members’ benefit.
“Small saccos should also consider merging as this will benefit them on reducing costs of audit services, investment in multiple ICT platforms as well as ease pressure on the need to employ more people to serve their members,” he said.