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Non-deposit taking SACCOs urged to beat deadline for licensing

The government published new regulations for Non-Deposit Taking (NPT) Saccos to meet by the end of June this year.

The SACCOs were to seek for authorisation to operate from the Saccos Societies Regulatory Authority (SASRA) following the publication of Regulations 2020, which were to take effect on 1st, January 2021.

With the compliance deadline fast approaching, which is on Wednesday, SASRA Ag. CEO Peter Njuguna said soon they will be issuing the first batch of licenses having received over 100 applications.

He however clarified that as much as they have been receiving the applications, data in their possession shows that as many as 150 Saccos that have filed their data with them, have not met the threshold on specified deposit taking Saccos.

Saccos Societies Regulatory Authority (SASRA) Ag. CEO Peter Njuguna and Cooperative Alliance of Kenya (CAK) CEO Daniel Marube during the Supervisory and Audit workshop meeting. Photo by Wangari Ndirangu

“We are however happy with the compliance for licensing which is the first entry point,” he said.

Njuguna encouraged SACCOs to keep on applying saying SASRA does not expect them to be 100 per cent compliant since there are many areas that Saccos need to work on.

He said Covid-19 has posed challenges and has seen business encountering bottlenecks such as loss of income and added SASRA is out to strike a balance so that they facilitate Saccos even as they comply by engaging them, guiding them to know their weaknesses vis-a-vis their performance standards.

“There is a standard to be met and as you compare Saccos and even as they grow the business, the growth has to be in a sound way,” the CEO said. Njuguna who was speaking during a cooperative supervisory and Audit workshop over the weekend said the meeting was timely for NDT Saccos as there is a remarkable shift in terms of governance.

“The regulations for NDT have given the supervisory committee expanded mandate to do the job that is normally done by Audit. This is critical in that it is providing oversight to what the board and management are doing therefore having a platform to get clarity on what is expected and doing things not over and over again but differently,” the CEO said.

For Audit committee, Njuguna added that Deposit Taking (DT) Saccos have even a greater responsibility to provide assurance to members that the policies and strategies they have as well as the resolutions passed at the AGM are being implemented and correctly so.

“Supervisory committee members are unique and they derive directly their money from members and report directly to them, therefore in terms of strengthening governance and for NDTs Saccos that are small, they do play a pivotal role,” he said.

Njuguna further said that although the regulations don’t have a vacuum and have to be complied with since there are consequences, he assured Saccos that it’s not a bullet kind of consequence and added that the most important thing is for them to first apply for the license.

“There are incidences where capital is not there and some Saccos have plans. As long as they are serving their members, the objective of the government is not to close them but to bring them to a new operating standard which is demanding,” the CEO said.

He urged Saccos to continue submitting their applications and also enable conversation with the authority to start.

“Our mandate as a SASRA first is to advise, walk with the institutions to enable them understand and give them time before deterrent measures come into place,” he said.

Njuguna clarified that the law provides for provisional authorisation of 12 months in the journey of compliance under the new regulatory framework

When it comes compliance date which is 30th of June, the CEO clarified that this does not mean that the process will be done by then but noted they have until September to process the applications.

“We will have to be engaging and communicating with the Saccos. We have seen the Saccos response is good so far as they are still coming to register,” Njuguna said.

Cooperative Alliance of Kenya (CAK) CEO Daniel Marube encouraged NDT Saccos to comply with the regulations saying they will strengthen systems and governance of the sector.

He said that as Saccos they, are encouraged and have discussed with SASRA not to shut out those Saccos that are not ready and have not met the threshold by 30th of June.

“The Saccos that feel they are not ready should discuss with the regulator. We want SASRA to hand-hold the small Saccos, guide them on how they can walk this journey of compliance,” he said.

Marube added that following Supervisory/ Audit workshop outcome, it shows clearly that the cooperative movement is sound and strong despite the challenges due to Covid-19 and encouraged co-operators to continue saving and also taking loans.

“The economy shows improvement we are urging members to continue saving as the country is moving well,” the CEO noted.

Under the new regulations that were published by the government, SASRA is also supposed to implement NDTs that mobilise membership and subscribe to their share capital through digital and electronic payment platforms and also people who reside outside the country.

The Co-operative movement in Kenya is rated number one in Africa with over 23,000 registered co-operative societies commanding a membership of about 14 million, employing more than 500,000 Kenyans directly and another 1.5 million indirectly.

They contribute about 32 per cent of the National Savings, have mobilized members’ savings and deposits of over Sh800 billion, with an Asset Base exceeding Sh1 trillion and loan portfolio of more than Sh700 billion as of 31st December, 2019.

By Wangari Ndirangu

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