Savings and Credit Cooperative Societies (SACCOs) in the country are up in arms over failure by employers to remit monthly statutory deductions and contributions of members.
Officials from Saccos have expressed fears that the non-remittance of the dues was crippling their operations making it almost impossible to transact optimally as their financial bases were running out due to low liquidity levels.
Ukulima Sacco chairman Philip Cherono told a press conference that the impasse’ had disrupted the financial base of the credit unions because more than Kshs 70 million were yet to remitted to respective societies..
He said notable defaulters included County governments, parastatals and institutions of higher learning which have since the onset of covid 19 pandemic failed to remit employee’s deductions, at trend that has led to non-performance and servicing of running loan packages.
“, we are still grappling with non-remittances from some of the employers and since March when the covid-19 was announced we have not received over Sh70 million from few counties, three universities, water services boards and other government parastatals,” said Dr. Cherono.
The delay Cherono added was likely to contribute to high non-performing loans and the Senate is yet to agree on the revenue formula which is a big stumbling block.
“We appeal to the Senate to move with speed and resolve the revenue formula standoff to enable counties access to meet their financial obligations,” he added when he donated 30 water tanks, 1000 face masks and 40 litres to Kenya Forestry Research Institute (KEFRI) headquarters Muguga.
Dr. Cherono however said the Sacco witnessed an unwilling behavior from members who are not borrowing or taking any loans in the recent months as the corona virus continues to spread.
“Most of the members mainly those small and medium enterprises and individuals who have lost jobs are no longer borrowing as their purchasing power have been interrupted,” he added.
He noted that the management restructured and rescheduled repayment period of the loans of the affected members.
Kenya Union of Savings & Credit Cooperatives (KUSCCO), the umbrella body of savings and credit cooperatives (SACCOs) in Kenya confirmed that the big Saccos are awash with cash as borrowers are reluctant to borrow as the effects of the pandemic continue to disrupt the economy.
The Sacco Chief executive officer Richard Nyaanga said out of the total 40,000 members, 75 per cent are on mobile banking platform.
“We have lowered interest rates cumulatively from 1.5 per cent to 1.25 per cent per month. Equally we have also reduced the same on all the products. While non-performing loans threshold has increased from 4.1 per cent before covid-19 to 5.2 per cent as at end of July,” said Nyaanga.