The cooperatives regulator wants savings and credit cooperative societies (Saccos) to quickly refund member deposits when they quit the societies following frustrations that has hit savers who want to liquidate their money.
Sacco Societies Regulatory Authority (Sasra) chair John Munuve said membership has been hampered by delays in liquidating savings, a scenario that is giving members a bad experience.
He told Saccos to put in place mechanisms to quickly and efficiently resolve member complaints, particularly those seeking refunds of their deposits or savings after exiting from membership.
“The perennial delays in refunding member deposits, which has been the bane of members exiting their respective SACCOs, should be made a thing of the past,” Mr Munuve said in the 2020 annual report.
“Saccos must make it easy for exiting members, just as it has made it easy for joining members. This will endear them to more membership but is also consistent with the International Co-operative Principle of free entry and free exit,” he said.
Saccos are facing cut throat competition from alternative saving options as well as gambling companies seeking out the disposable incomes from Kenyans.
Read also: IMF taxes push up fuel and food inflation
The Sacco regulator reckons that they are having difficulty attracting younger people because they are not competing well with digital alternatives which are easy to invest in and easy to exit.
The regulator said in a fast, evolving technologically driven financial sector in Kenya, impediments that make exit from Saccos tedious only serve to drive away potential members, particularly the younger generation, who will not hesitate to invest their funds in many other available alternative financial institutions.
“The authority shall therefore not hesitate to institute stiff regulatory sanctions against Saccos and their officers who shall be found to unreasonably delay refunding of members deposits or resolving non-legal disputes with their members, thereby tarnishing the reputation of the entire subsector,” Mr Munuve said.
Despite the financial difficulties that hit Kenyan during the pandemic that was expected to see most workers liquidate their savings, there was actually an increase in membership and the value of savings.
The number of Sacco savers has jumped to 5.47 million in 2020 compared to 4.5 million reported in 2019.
This increase in membership was primarily attributed to the uptick in the number of licensed deposit taking-Saccos to 175 from 172 following the inclusion of Ushuru, Kimisitu and Acumen saccos last year.
The total assets within the deposit taking-Sacco system grew to reach Sh627.68 Billion in 2020 from Sh556.71 billion recorded in 2019.
Total deposits grew by 13.41 per cent to Sh431.46 billion last year from Sh380.44 billion previously.