This archive report was first published on 24 August 2021.
Regulators are racing against time to bring digital Saccos under their oversight, but many are still evading their grasp.
At the beginning of 2021, the Sacco Societies Regulatory Authority (Sasra) brought digital Saccos and those targeting Kenyans abroad under regulatory oversight, as per the Sacco Societies Regulations 2020.
However, six months later, the compliance among these Saccos appears dismal. According to Sasra, it had received only 157 applications by June 30, with four applying under the diaspora Sacco's category and one under the digital or virtual Sacco's category.
The remaining 152 Saccos applied under the category of those with deposits of more than Sh100 million. Sasra noted that it did not have an indication of how many digital or diaspora Saccos would lodge applications, indicating the extent to which these Saccos are out of the regulator's sight.
When implementing the regulations, Sasra Chief Executive Peter Njuguna said they did not have any expectations on the number of specified Saccos that would register and come on board or the categories they would represent.
According to the Commissioner of Cooperatives, Geoffrey Jang'ombe, the low level of compliance with the new rules among diaspora and virtual Saccos is in line with the number of such Saccos registered by the Department of Cooperatives.
There are about 19 diaspora Saccos, of which four applied for regulation by Sasra. Jang'ombe said Saccos catering for Kenyans living and working abroad that are yet to make the applications are working with Sasra for compliance.
He added that there are few virtual Saccos registered by the Department of Cooperatives, with only three registered, but numerous outfits marketing themselves as digital Saccos.
Following the coming into force of the regulations, virtual and diaspora Sacco's have to seek authorisation from Sasra before they commence operations, regardless of their size.
This is unlike traditional Sacco's, which will need to be regulated by Sasra if they have deposits of Sh100 million and above.
There have been numerous instances where unscrupulous individuals and businesses have raised funds through online platforms claiming to operate digital Saccos, leaving members with little options to claim their funds.
Getting digital and diaspora Saccos under Sasra's oversight seeks to end the rogue nature of some cooperatives largely present online but with little physical presence.
According to Agriculture and Cooperatives CS Peter Munya, Sacco's that require to be regulated by Sasra as per the 2020 regulations and the Sacco Societies Act of 2008 and had not applied would be punished.
He told Sasra to up its vigilance on the industry, saying, 'If there are any potential applicants that did not submit their applications, then the law will definitely catch up with you.'
Virtual and diaspora Saccos are just a small fraction of the industry, with 23,000 registered cooperative societies sharing 14 million members, holding Sh732 billion of member savings, controlling an asset base of Sh1 trillion, and a Sh700 billion loan portfolio.
