Financial cooperatives performed relatively well despite the economic slowdown induced by the Covid-19 restrictive protocols.
Data from the Sacco Societies Authority (SASRA) indicated that nearly all the Saccos recorded impressive growth in loan disbursement, assets and deposits.
The Cooperative Alliance of Kenya (CAK) the umbrella body of cooperative societies explained that gross loans advanced to customers by the Savings and Credit Co-operative Society (SACCO) increased by 13.2 per cent to Ksh474.8 billion as at end of 2020.
CAK chief executive Daniel Marube said the societies posted a loans increase from Ksh419.6 billion in 2019 financial year during the Covid-19 period despite the hardships that many SACCOS faced at the height of the pandemic.
“Our strength is in numbers. With over 14 million Cooperators in Kenya, and operating on the principle of business with social responsibility, we have been able to demonstrate that the Cooperative model is resilient and sustainable as a driver of development,” said Daniel Marube, Cooperative Alliance of Kenya, chief executive officer.
During a pre-press conference on the upcoming international cooperative day celebration on Saturday Marube added that deposits held by the deposit taking saccos grew by 13.4 percent to Sh431.5 billion by close of 2020, from Sh380.4 billion recorded in 2019.
Total assets at the end of 2020 increased to Ksh627.7 billion, compared to Ksh556.7 billion at the end of 2019, accounting a 12.7 percent growth.
However, the Non-Performing Loans Portfolio increased to Sh36.1 billion in the year 2020 representing 8.4 percent of the total increase as more Cooperators experienced difficulties in loan repayments due to job losses and pay cuts.
This is a sharp rise from 6.15 per cent or KSh25.8B recorded in end of 2019, even as restructured loans grew to Sh7.7 billion as at December 31,2020 from Sh2 billion recorded in March 2020.
“Among the effects of Covid-19 is loss of income that has reduced the ability of some Cooperators to increase the savings, and at worst, repay loans leading to their rescheduling and restructuring. Some individuals have depleted their savings as they seek to meet immediate financial obligations. In nutshell, the Covid-19 period has presented challenges, and exposed opportunities inherent in the sector, which if exploited, could enhance resilience and enable it to play a greater role in development,” he added.
On the positive note, the core capital of the Saccos increased to Sh97.74 billion from Sh79.20 billion, representing a 23.41 per cent growth, mostly driven by intensive product development and heavy investment in Information Communication Technology.
”While in the past Sacco members used to flock the halls to access loans, repay loans and even seek their account balances, today these services are available through ICT platforms,” said Marube.
He added, the adoption of modern technology has enhanced efficiency in service delivery and prudent use of human and other resources, with some working from home, the spiral effect of which is increased efficiency in service delivery.
In agriculture subsector centered cooperatives, he said good weather had ensured growth, while the government led reforms in tea, coffee and sugar sectors is expected to result in increased disposable income, which will boost individual savings.
The reforms being undertaken in these agriculture sectors are consistent with the principles of Cooperative movement that advocates for poverty alleviation, equity and shared prosperity.
By Wangari Ndirangu