SASRA Requests Treasury Assistance in Collecting Sacco Deductions from State Entities

Saccos regulator is asking for direct deduction of Treasury allocations to counties, public universities, and other State-linked bodies to refund Sh2.24 billion withheld from employees but not remitted to thrift institutions.

The Sacco Societies Regulatory Authority (Sasra) has stated that it is developing a structure that, if implemented, would result in such exchequer-funded bodies as ministries losing part of their budget funding to compulsorily settle their commitments to saccos.

According to Sasra chairperson Jack Ranguma, the fact that these employer institutions are paid by exchequer funds makes recovering non-remitted deductions difficult because it is dependent on the availability of funds and also fraught with conflict of interest.

“In this regard, the authority is considering putting in a framework to enable the recovery of such non-remitted saccos’ deductions through the National Treasury directly from the exchequer grants or funds appropriated in favour of these governmental institutions,” says Mr Ranguma.

This means that non-remitted money are resolved as a first charge, and these entities receive whatever remains of their allocation once this is paid.

According to Sasra data, employers owed saccos a total of Sh2.67 billion as of December last year, affecting 80 saccos and 66,452 individual members.

Sh2.02 billion (76 percent) of the Sh2.67 billion was intended to repay members’ loans, implying that non-remittances have fueled defaults in the industry.

“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,” said Mr Ranguma.

County governments and their assemblies are the biggest defaulters, owing Sasra-regulated saccos Sh1.35 billion, or over half of the Sh2.67 billion in unpaid funds as of the end of December. Involved are 43,139 members.

Public tertiary institutions come in second with Sh620.52 million. State-owned corporations held Sh143.1 million, while public sector businesses, like as water utilities, held Sh64.2 million.