Harsh Times Led to Sacco Borrowing Rise by 9%, Report Shows

Low purchasing power coupled with harsh economic realities pushed savings and credit co-operative societies (Saccos) members to borrow more to fund their financial obligations during the financial year ended December 2021.

A new report by Sacco Societies Regulatory Authority (SASRA) says gross loans grew to Sh608.75 billion in 2021 from Sh555.05 billion in 2020, accounting for a 9.67 per cent growth rate.

The agency currently regulates 176 Deposit Taking Saccos (DT-Saccos) and 185 Non-Withdrawable Deposit-Taking Saccos (-NWDT-Saccos).

The Sacco Supervision Annual Report (SASRA), 2021 released recently interestingly noted that during the review period the borrowers from 361 regulated financial cooperatives increased their deposits with Sh50.43 billion after borrowing Sh53.7 billion.

SASRA chairman, board of directors George Murathe said the savers dared the harsh economic realities to increase their deposits to Sh564.89 billion in 2021 compared to Sh514.46 billion in 2020 representing an average growth rate of 9.80 percent.

The report notes that the Sacco sub-sector’s total assets grew by 9.93 percent in 2021 to reach Sh807.11 billion from Sh734.22 billion recorded in 2020. The 176-DT-Sacco had the highest proportion of the total assets amounting to Sh691.01 billion and representing 85.63 percent of the total assets’ portfolio with NWDT-Saccos commanding a share of the 14.37 percent of the total assets. 

The report revealed that the Sacco sub-sector recorded growth in nearly all the business segments during the review period. Though the recorded growth was slightly lower compared to the performance registered in 2020, a situation attributed to the after Covid-19 effects slowed down growth rates at the segmental levels.

For example, the total assets of DT-SACCOs grew at 10.10 percent in 2021 compared to a growth rate of 12.75 percent recorded in 2020. While their total deposits grew by 9.92 percent in 2021 compared to a growth rate of 13.41 percent recorded in 2020.