This archive report was first published on 21 June 2021.
June 21, 2021
Loan defaults have been a major challenge for Sotico Sacco, a situation that has hindered the society's growth. Chairman Samuel Munyao Nzeki attributed the issue to members defaulting on loan repayment.
Speaking at a meeting, Munyao revealed that the society tried to assist members with huge unbearable loans by amalgamating them. However, this short-term remedy only led to members defaulting again after a short while due to additional loans, as Munyao noted.
Another challenge faced by the society was the situation where some members left employment just when they had taken loans, leaving them with insufficient terminal benefits to cover their balances, especially for seasonal employees.
Munyao urged members to invest more savings on their unwithdrawable deposits, which is a key multiplier for the amount to be loaned. He also asked delegates to be keen on members' repayment history when issuing loan forms to avoid defaulting.
Furthermore, Munyao cautioned members against relying heavily on loans as the only source of finance and warned them to be wary of the proliferation of shylocks, who charge exorbitant interest rates.
“Let us advise and continue training our members to avoid such traps of people taking Sh500 interest for every Sh1000 they repay over a period of 1 or 2 weeks, which is a burden that no one should shoulder,” Munyao said.
Chief Executive Officer Everline Moraa Nyokwoyo thanked the board, delegates, and members for their support, stating that the society is doing everything possible to satisfy the needs of its members despite the current challenging economic situation.
The Sotik Sub County Co-operative Officer, Wesley Cheruiyot, lauded the society for practicing prudent fiscal management and urged them to adapt innovative ways of transacting business.
