SACCOs union achieves new ISO standard

Kenya Union of Savings and Credit Cooperative (KUSCCO) has received the new ISO 9001:2015 standard certification for complying with statutory requirements set by Kenya Bureau of Standards. Speaking during the ceremony in a Nairobi hotel, KUSCCO Managing Director George Ototo said the union had made history to conform to the new standards.
 “Today marks another milestone in the union’s history. This achievement was made possible through the hard work and leadership in the union and the coordination of the ISO team. Let us join hands in celebrating the union’s transition to the new ISO standards,” he said. Mr Ototo said the certification will drive the union to deliver quality products and services that meet customer needs as well as regulatory and statutory requirements. Appointed He said the union has gone global after its chairman George Magutu was recently appointed as a director of the International Cooperative Alliance. The MD was also re-appointed to the International Raiffeisen Union (IRU) board representing SACCOs in Kenya.  
“The new ISO certification has now given us a footprint to become a reliable business partner. It will help towards risk mitigation in terms of competition,” Ototo said. Mr Magutu said the re-certification was developed by ISO champions after the previous ISO 9001:2008 expired in 2017. “We will continue to champion our core mandate of advocacy and representation as we participate and make contributions towards formulation, conclusion and implementation of the proposed National Cooperative Development Policy and relevant Acts and regulations,” he added.
Kenya Bureau of Standards Quality Assurance Director Andrew Maho said 28 laboratories have been certified across the country that include meteorological services. Maho said they were working on proposed ISO certification for the secretariats.


Ushuru SACCO office block set to open in November.

The Sh274 million eight-floor Ushuru SACCO Kilimani headquarters is scheduled to open for tenants next month.
Chief executive William Pudha said leasing of space to State agencies, corporates and NGOs would see tenants design the space to suit individual brands.
The SACCO already partitioned the second and third floors as offices for its 19 employees in May ahead of the planned opening of a front office services activity (Fosa) complete with a banking hall.
“Our investment is purely financed from internal sources where members have no burden of interest loan repayment risks and it took us 12 months to construct the property,” said Mr Pudha.
Ushuru Sacco draws its membership from Kenya Revenue Authority, National Hospital Insurance Fund, PZ Cussons, Fly540 Aviation, Kenya Airport Authority, Kenyatta National Hospital, National Transport and Safety Authority, Retirement Benefits Authority, Kenya Literature Bureau, Kentrade, East Africa Safaris and National Housing Corporation.
Ushuru said the property sitting on a parcel of land bought for Sh80 million is a lifetime investment for the sacco that has since ushered in a sister co-operative, Ushuru Investment Co-operative.
The new entity has helped members acquire residential parcels of land in Kisumu and Kitengela, Kajiado with land in Mombasa expected to be unveiled soon. “SACCOs are drivers of socio-economic development and that spirit needs to be secured via continuous programmes that uplift the livelihoods of members,” he said.
The incoming tenants, he said, would have access to the open rooftop that can be used for official ceremonies as well as an underground and ground level secure parking bay manned round the clock.
“We have received many enquiries and will in November open up the facility for occupation as we have completed the development. We have installed two elevators as well as round the clock CCTV system for all areas,” said Mr Pudha.
The SACCO which started its operations 1970 has a Sh3 billion asset base with 5,946 members who as at last year had saved up to Sh2.7 billion.


SACCOs grapple with tough new State laws and accounting rules

Early this year, mysterious legislation was tabled on the floor of the House by the Leader of Government Business Aden Duale. The Bill was to have huge ramifications on Savings and Credit Cooperative Societies (SACCOs) across the country. The Statute Law (Miscellaneous Amendments (No2) Bill) 2018 was meant to change the way the SACCOs function. It included proposals to amend the Co-operative Societies Act, Cap 490 and the SACCO Societies Act, Cap 490B, and introduce a new, privileged class of SACCO members called Social Impact Members who were supposed to be outsiders –without savings in any SACCO. They were to be allowed to vote only on matters that affect them. They were also not required to attend all meetings like other ordinary members. When Mr Duale introduced the Bill for the first reading in Parliament, there was uproar across the cooperative movement.

SACCO lobbies – the Co-operative Alliance of Kenya and the Kenya Union of Savings and Credit Co-operatives (KUSCCO) – were up in arms against the Government, saying they were not consulted and did not participate in its creation. KUSCCO Managing Director George Ototo told Financial Standard that the proposals in the Bill pose threats to the survival of SACCOs. “The Bill is clearly an affront to the SACCO movement. It is meant to have SACCOs taken over by outsiders. It will distort cooperative governance and create a second centre of power beyond reproach within the sector,” he said.

Acting Principal Secretary for Cooperatives Chris Kiptoo in another interview said he had no idea how the Bill got to Parliament. “As far as I am concerned, it is a mystery to me. I do not know how the Bill got to Parliament since even Treasury is not aware of its provisions,” he said, adding that he is also unaware who presented it to the Cabinet. But even as Dr Kiptoo struggles to come to terms with the mystery, his docket is preparing three new laws that, if passed into law, could again spell doom for SACCOs. They are the SACCO Societies (Amendment) Bill, 2018, the Financial Markets Conduct Bill and the SACCO Deposit Levy (Amendment) Order 2018.


SACCOs challenge Treasury on plan to increase deposit taxes

Savings and credit co-operative societies have gone to court to challenge a Government plan to increase the tax levied on cash deposits. The Kenya Union of Savings and Credit Co-Operatives Limited (KUSCCO) has asked the High Court to stop the increase of the SACCO deposit levy from 0.1 per cent to 1.75 per cent. ALSO READ: Kavanaugh 'sexual assault victim' speaks out The union argued that SACCOs would have to pass the burden to members if the new levy was enforced, making erstwhile affordable loans more expensive.

Savings and credit co-operative societies have gone to court to challenge a Government plan to increase the tax levied on cash deposits. The Kenya Union of Savings and Credit Co-Operatives Limited (KUSCCO) has asked the High Court to stop the increase of the SACCO deposit levy from 0.1 per cent to 1.75 per cent.

The union argued that SACCOs would have to pass the burden to members if the new levy was enforced, making erstwhile affordable loans more expensive. “An increase in the deposit levy will definitely trickle down to members since it will make it hard for SACCOs to lend on favourable terms due to the pressure to remit millions of shillings as tax for deposits,” said KUSCCO lawyer Joshua Magee. According to KUSCCO, bonuses and dividends paid to SACCO members on their savings and deposits at the end of each financial year would also be reduced to factor in the new tax rate unless the court intervenes.

The increased taxes on sacco deposits was proposed by the Sacco Societies Regulatory Authority (SASRA) in February and approved by the National Assembly in April. The new taxes are scheduled to come into effect from January 2019.

However, KUSCCO has submitted that there was no consultation with stakeholders, including the 3,560 registered SACCOs in the country. According to KUSCCO, the increment is punitive and unfair to SACCO members who make deposits expecting returns, and a double taxation to the majority who are employed and have their salaries taxed.
 “Deposits made to SACCOs are from net salaries of employees who have already been taxed by the Government. The new levy exposes them to double taxation, which is a burden to thousands of small earners who depend on SACCOs for soft loans,” said Mr Magee.

According to the lawyer, Saccos also contribute to the exchequer through license fees and taxes to both national and county governments, making the new tax plan unjustifiable. He further argued that since SACCOs have continued to grow and increase in number since 2010, SASRA could still collect more money from the existing 0.1 per cent tax on deposits instead of seeking to punish already overburdened members with a new tax. “SACCOs are private entities registered and established for public good. The role of the Government should be merely to ensure there is a conducive environment for their operation as opposed to making the conditions tougher,” said Magee.


Risky memberships in focus as weight of bad loans chokes SACCOs

Distribution of NPLs by DT-SACCO cluster in 2017 (NPL ratio %)

NPLs was highest among community-based SACCOs,as farmer-based SACCOs followed in the list of loan defaulters
Community-based deposit-taking saccos are hardest hit by non-performing loans (NPLs), new data by the regulator showed, signaling the risks of loose membership.
They saw their NPL ration rise to 15.91 per cent in 2017 from the 9.84 per cent recorded the previous year, data in the Sacco Societies Regulatory Authority (SASRA) showed.
“This underscores the difficulty with which these SACCOs whose field of membership is usually quite loose are normally operating,” the regulator said.
An increase in demand for savings products has seen the emergence of many community SACCOs, most of which offer borderless membership unlike was the case before when SACCOs were modelled under umbrella associations, social organisations and companies, with membership restricted to staff and officials.
Farmer-based deposit- taking SACCOs recorded the second highest NPLs ratio at 11.42 per cent in 2017 despite declining marginally from the 13.6 per cent the previous year.
The NPLs among the government-based deposit-taking SACCOs rose to 5.95 per cent in 2017, from 4.28 per cent the previous year.


ISO 9001


We commit to consistently promote SACCOs through advocacy and provision of quality technical and financial products that exceed the members’ expectations.
We shall comply with the statutory requirements and actively pursue continuous improvement of the ISO 9001:2015 Quality Management System (QMS) processes, capabilities and effectiveness.
In pursuit of our commitment we shall ensure that the quality policy and objectives that have been established and communicated to the Union employees shall be reviewed annually in accordance with the stipulated framework and quality standards.”