State calls on employers to remit sacco deductions amid inefficiency concerns

BY JOSEPH NG’ANG’A(KNA) 

Savings and Credit Cooperative societies that falsify their books of accounts to attract new membership have been put on notice. Co-operatives, Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary (CS) Wycliffe Oparanya also called on employers to remit Sacco deductions for their employees. 

The CS observed that several Sacco leaders have been borrowing heavily to pay large dividends to their members, contrary to the annual profits earned due to competition for new members. He warned that this practice is not sustainable and could lead to the collapse of Saccos. 

“As a Fellow Certified Practising Accountant (FCPA), I will be reviewing the books of account of Saccos to ascertain which ones have been falsifying their records and declaring non-existent profits to provide large dividends,” he said. 

Oparanya noted that he is aware of a coffee co-operative whose records indicate that it sold its coffee at the auction for Sh80 per kilogram while paying its members Sh120 per kilogram. The directors have been borrowing to pay farmers the extra Sh40, leaving the co-operative with a debt of Sh225 million from commercial banks. 

Now, the same farmers are left to pay the loan, he pointed out. He made these remarks during an award ceremony for Ushirika Day Celebrations at a Nairobi hotel, where he stated that his ministry, along with other relevant government agencies, will ensure accountability for those who mismanage and misuse members’ funds. 

He reiterated the government commitment to protecting Sacco member’s deposits, saying currently his ministry is reviewing the existing co-operatives laws and regulations as it moves to seal existing loopholes and enhance the growth of the critical sector, currently the biggest in Africa and seventh in the world. 

In recognition of the vibrant Kenyan co-operatives movement, he said the government has prioritized co-operatives through the Bottom-Up Economic Transformation Agenda (BETA) due the sector’s ability to pull resources together for the purpose of nation building. 

"Kenya is currently reviewing its legislative and regulatory framework within the co-operative sector vide the Co-operative Bill 2024 and the Sacco Society’s Amendment Bill, 2024 currently in parliament,” Oparanya said. 

The CS said these reviews shall enable the creation of a legal and regulatory framework that protects the most critical part of co-operatives, that is, member’s deposits. “Moving forward, we will intensify our efforts to ensure that such misconduct is not only called out but met with decisive legal action,” the CS said. 

To enable this, Oparanya said the Sacco Societies Regulatory Authority (SASRA) has issued a ‘Whistleblowing Policy’ to promote institutional integrity and transparency by encouraging whistleblowing on misconduct, fraud, and unethical behavior and emphasizes that every board member and employee is responsible for knowing and adhering to the policy, including reporting breaches.