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Protect sacco savers from loss on deposits


Protect sacco savers from loss on deposits

Monday June 19 2023

Delegates follow proceedings during the 6th Kenya Union of Savings and Credit Co-operatives (KUSCCO) Leaders Conference in Mombasa on February 24, 2021. PHOTO | KEVIN ODIT | NMG

The sacco sector regulator is seeking to change the law to allow it to appoint trustees to oversee a Deposit Guarantee Fund (DGF) in the latest effort to protect savers from losses on their over Sh600 billion deposits.

Treasury Cabinet Secretary Njuguna Ndung’u says the Sacco Societies Regulatory Authority (Sasra) is proposing an amendment to the Sacco Societies Act, 2008, that will, for the first time, help protect depositors from losses.

The Act provides for setting up a deposit insurance fund for credit unions, but the scheme has never been established to date.

The government notes that there has been a lack of a resolution mechanism for financially distressed saccos.

The sector rolled out prudential guidelines to help with the financial stability of Saccos more than ten years ago.

However, Sacco members have been left exposed, unlike in the banking and insurance sectors.

This proposal is welcome given the instability in the Sacco movement that came with the Covid-19 health crisis.

Members of several saccos are suffering silently after the pandemic pushed their organisations to the brink.