Kenya: Sasra Seeks Treasury Assistance to Recover Unremitted Sacco Deductions from State Entities

The Sacco Societies Regulatory Authority (Sasra) is advocating for the direct deduction of funds allocated by the Treasury to counties, public universities, and other government-related entities. This action aims to recover over Sh2.24 billion in deductions that these entities withheld from their employees but failed to remit to the cooperative thrift institutions.

Sasra, the regulator for Saccos, is exploring the possibility of implementing a framework that would require exchequer-funded entities, including ministries, to allocate a portion of their budget to compulsorily settle their obligations to Saccos.

Jack Ranguma, Chairperson of Sasra, highlights that the challenge of recovering these non-remitted deductions arises from the fact that the employer institutions are funded through exchequer funds. This dependence on available funds, coupled with conflicts of interest, has hindered the recovery process.

In response, Sasra is considering the establishment of a framework that would enable the direct recovery of non-remitted Sacco deductions through the National Treasury. These deductions would be settled as a priority, with the remaining budget allocation disbursed to these governmental institutions afterward.

Data from Sasra, up to December of the previous year, indicates that employer institutions owed Saccos a total of Sh2.67 billion, affecting 80 Saccos and 66,452 individual members. Out of this amount, Sh2.02 billion, or 76 percent, was designated for repaying members’ loans, exacerbating defaults within the sector.

“The net effect is that all these members’ loans stood defaulted, and at the same time, the ability of these 80 Saccos to meet their financial obligations was severely hindered,” explained Mr. Ranguma.

Among the defaulters, county governments and their assemblies topped the list, owing Sh1.35 billion or nearly half of the Sh2.67 billion in non-remitted funds owed to Sasra-regulated Saccos by the end of December. This impacted 43,139 members. Public universities and tertiary colleges followed with Sh620.52 million, while state corporations had non-remittances of Sh143.1 million. Public sector companies, including water companies, held Sh64.2 million, national government ministries were responsible for Sh27.7 million, public school employees owed Sh12.5 million, and constitutional bodies accounted for Sh24.36 million in unpaid Sacco deductions.