Savings and Credit Cooperative Societies, popularly known as SACCOS, are key players in the Financial Industry. They are also popularly known for giving other Financial Institutions like Banks a run for their money, as they offer more personalized financial services to the Kenyan population. The SACCO sector in Kenya, estimated to be worth over Shs. 1 Trillion, appears to be steeped in fear as many in the category continually report mismanagement and fraud through SACCO officials and their respective boards.
This has pushed for the State Department of Cooperatives to call upon the Ethics and Anti-Corruption Commission alias EACC to take stern action and legal measures to protect an estimated 14 million Kenyan Sacco members. The Cooperatives Department has also formed a special unit that is tasked to track fraud in SACCOS. A Memorandum of Understanding (MOU) has therefore been signed between the EACC and this unit, dubbed Ethics Commission for Co-operative Societies, abbreviated ECCOS.
Ms. Mary Mungai, the current Commissioner of Co-operatives reiterated that they want to achieve a working framework and strengthen the reporting line of all SACCOS and ensure guaranteed sustainability and credibility of the sector which boasts of over 22,000 registered SACCOS, among the highest in the continent.
The Department of Co-operatives’ power to enforce compliance, procurement and asset disposal by the SACCOS are limited, since they are classified as private entities. SASRA which is the Saccos Sector Regulatory Authority mandated by the government to police deposit-taking Co-operatives, in 2017 through its chairman Mr. Sammy Ruto reported the need to have a Deposit Insurance Facility to increase confidence in the SACCOS. This Insurance Facility will be set to Compensate members in the event of institutional failure.
A perfect example of such situations could be best demonstrated by the recent cancellation of Ekeza Sacco’s registration by the Commissioner, citing failure to meet its objectives whereby about 50,000 members’ deposits were at stake. Other examples would include Mwalimu and Stima Investment Co-operatives. The trio mentioned above is estimated to have lost its members up to a whooping Shs. 3.6 billion, through mismanagement coupled with fraud perpetrated by SACCO officials and their boards.