Government Will Seize Assets of Sacco Loans Defaulters

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Cooperatives Deputy Commissioner, Geoffrey Jang’ombe (R)

Defaulters of loans in the cooperative movement risk having their assets seized by the government to recover the monies owed to the respective Savings and credit cooperative societies, the Commissioner of Cooperatives said yesterday.

The Deputy Commissioner, Geoffrey Jang’ombe said the defaulters were owing the Saccos an accumulated more than Kshs. 8 billion in loans which have not been serviced over the years yet the defaulters were still earning their monthly incomes apart from owning assets worth billions of shillings.

 Mr. Jang’ombe said: “This is a matter we are not taking lightly and the law empowers us to take action against those defaulting as well as county governments which have failed to remit deductions as contributions to their respective societies.”

He said so far the government had attached the accounts of the Mombasa county government for failing to remit the monies it had deducted from employees to their various respective Saccos adding that other counties that risked having their accounts attached included Nairobi and Nakuru for such failures.

The Deputy Commissioner who was representing the Commissioner of Cooperatives Mrs. Mary Mungai was speaking during Afya Sacco’s Annual Delegates Conference at the Kenyatta International Convention Centre (KICC) in Nairobi.

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He told the Cooperative Societies in the country to avoid borrowing externally from the commercial financial institutions even if they were hard pressed by their liquidity status due to delays to get remittances from the county governments or national government ministries.

“Savings and credit societies are the fastest growing sub-sector in the movement, have mobilized savings of more than Kshs 230 billion but the entire cooperative movement in Nairobi county alone has accumulated assets of more than Kshs. 3=230 billion,” said the Commissioner.`

He said the vibrant and dynamic cooperative movement in Kenya is the strongest in Africa ,  a key player in the economy, controlling about 43 per cent of Kenya’s gross domestic product (GDP). The Cooperative Societies in Kenya employs more than 300,000 people, besides providing opportunities for self-employment to many more.

Mr. Jang’ombe said that the top five Saccos in the country were led by Mwalimu with accumulated assets worth more than Kshs. 40 billion, followed by Stima Sacco with accumulated assets worth more than Kshs. 28 billion, Police Sacco Kshs. 22 billion, Afya Sacco Kshs. 16 billion and Harambee Sacco Khshs. 12 billion as at the last financial year.

Addressing the delegates’ conference the Afya Sacco chairman Vitalis Lukiri said the society had accumulated total assets to the tune of Kshs. 16.146 billion compared to the previous financial year when they were at Kshs. 14.82 billion.

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Mr. Lukiri said outstanding loans with members stood at Kshs. 13.087 billion compared to the previous financial year when they stood at Kshs. 11.56 billion marking a growth of 13.2 per cent in a single financial year.

He said: “The Sacco achieved a turnover of Kshs. 2.19 billion compared to the previous year when it stood at Kshs. 216 billion, while expenditure increased by 4.2 per cent from Kshs. 988.8 million the previous year to Kshs. 947.42 in the just ending financial year.”

The chairman told the Sacco delegates that the society had accumulated a surplus for distribution of Kshs. 845.6 million this ending financial year compared to Kshs. 782.3 million while the provision for loan loss stood at Kshs. 359 million compared to Kshs. 299 million the previous year.

He said that government efforts to favourably manage the country’s economic environment by enacting a law to control interest rates charged by commercial financial institutions on the market did not reduce the society’s members’ demand for loans, but instead increased it.

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The chairman said that the Sacco had to introduce a variety of new products to raise additional income and recommended to pay interest and dividends on members deposits and shares at 8.0 per and 10 per respectively.

He said that the prolonged general electioneering and politicking period prior to, during and after the last general elections also adversely affected the general performance of the society considering what the management had planned at the last annual delegates conference.

At the same time Afya Sacco CEO, Felix Ndoi said the society has continued to operate and adapt to the changing business environment occasioned by devolution and the resultant transfers and re organization of membership at the county level.

Ndoi noted that they have changed the strategy in pursuing monthly remittances expected from the members given the rampant strikes and disruptions at county level of government.

He said that this year they have proposed a dividend payout of Ksh 845 million at a rate of 8 percent, the same as of last year to members whose deposits were at the Sacco as at December 2017. The society turn over in the year 2017 was Ksh 2.19 billion compared to 2.16 billion in 2016.

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