This archive report was first published on 1 July 2020.
As the COVID-19 pandemic continues to disrupt the economy, Savings and Credit Co-operatives (SACCOs) in Kenya are facing a severe crisis. With many members losing their jobs or experiencing pay cuts, SACCOs are struggling to collect deposits and meet loan demands.
According to data from the State Department for Co-operatives, SACCOs had mobilized savings of over KSh 420 Billion at the end of last year, accounting for 35 percent of overall national savings. However, with the onset of COVID-19, these gains are at risk of being eroded due to mass member withdrawals and low deposits.
Experts warn that non-performing loans (NPLs) in SACCOs will climb up due to the pandemic, and unlike banks, SACCOs have been less aggressive in rescheduling loan repayments or offering moratoriums due to lack of adequate liquidity in the sector.
George Ototo, Managing Director of the Kenya Union of Savings and Credit Co-operatives (KUSCCO), has sounded a warning of possible collapse of SACCOs, especially those drawing members from sectors such as aviation, tourism, horticulture, small businesses, and transport.
"Unless we rescue them, they might not come back from the look of things," Ototo said.
However, the State Department of Cooperatives has created the Cooperative Coronavirus Response Committee (CCRC) to bolster government action combatting COVID-19. The CCRC has so far raised KSh13 Million to assist co-operatives worst affected by COVID-19.
According to Ali Noor Ismail, Principal Secretary, State Department for Co-operatives, the CCRC has been able to reach 5,000 co-operative households that have been affected by the pandemic and will continue raising funds for mitigation efforts.
"We've been able to reach 5,000 co-operative households that have been affected by the pandemic and we will continue raising funds for mitigation efforts," Ismail said.
