Savings and Credit Cooperative Societies (SACCOs) in the country have raised a red flag over threats posed by cyber-related crimes in their operations due to poor governance and security structures in the institutional framework
Cooperative Commissioner David Obonyo decried that Cybercrime and poor governance were derailing the smooth operation and growth of the societies following reports that hackers were infiltrating their systems.
He said most SACCOs lacked a robust and foolproof technological infrastructure leaving their financial transactions and accounts exposed to criminal elements who target the ill-secured systems to rip off the member’s savings and contributions from the coffers.
“This challenge is more prominent in Saccos that are financially struggling and those that are suffering from leadership wrangles,” Obonyo told KNA.
Speaking during a meeting organized by the Cooperative Alliance of Kenya (CAK) for supervisory, audit, and board management of Saccos, the Commissioner said that technology-based challenges have led to systems in the Saccos collapsing and to some extent members losing their resources.
“A good number of Saccos operate on old technology platforms but of late the same has become vulnerable to emerging threats. This puts members’ resources at great risk,” he added.
Hackers using technology have equally infiltrated into SACCOs operation platforms and tapped resources leading to massive losses to members.
“In the last three two decades the country’s cooperative movement has struggled with the emergence of pyramid schemes where members have lost their hard-earned resources but we are glad the movement is addressing such challenges,” he assured.
Obonyo stated that cybercrime and corruption-related risks were at a record high despite being a global challenge while expressing optimism that the issues could be tamed with goodwill and enhanced sound governance by all stakeholders.
“Over and above the entire board of directors, there is a need to institute strong governance structures, for example, audit and supervisory committees. The committees will help in enhancing checks and balances on their operations.’ He said.
He suggested that the board subcommittees need to advise the directors on strategies to undertake to tame emerging threats to the Saccos operations.
Cooperative Alliance of Kenya (CAK) vice chairman David Mategwa said cybercrime was a modern time urging the directors and senior management in SACCOs to keep tabs on emerging technological trends to stay ahead of the hackers.
“A good number of Sacco operations structures have been hacked leading to loss of information and members’ resources. This has been aggravated by lack of robust technology platforms such as firewalls as some of the Saccos are still relying on old-fashioned knowledge models,” said Mr. Mategwa.
One key strategy the Sacco leadership in the country is pursuing is the establishment of shared platforms to offer members a third payment system, similar to that offered by banks and non-cash payment systems including Automated Teller Machines (ATMs) and credit cards.
Saccos with the support of CAK and Cooperative Bank launched the Co-op Tech platform to share core banking services to help them expand market reach and save cash and also hook up to the National Payment Systems that will enable seamless transfer of funds from funds such as the Hustler Fund.
The utility established in March this year is designed to cushion credit unions that are struggling to install the latest Information Communication Technology (ICT) tools to deepen productivity by sharing. The shared platform is embedded with a shared fund management platform that supports inter-Sacco lending and Cross-Sacco funds transfer.
Other Saccos have established the Kenya Saccos Central Liquidity and Shared Services Cooperative Society Limited KSCLCS) that will be regulated by the Saccos Society Regulatory Authorities (SASRA).
“Our Sacco subsector has registered tremendous growth and thus the need for the establishments of several shared platforms. In the USA credit unions enjoy several shared platforms. Going forward, directors and managers will continue to be trained and exposed to opportunities to enable them to confront risks facing Saccos,” Mategwa noted.
By Wangari Ndirangu
