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Leaders deliberate on the SACCO Amendment Bill, 2016

Leaders deliberate on the SACCO Amendment Bill, 2016

The SACCO sector has experienced tremendous growth over the years. It currently has over 6000 active SACCOS with about 14 million members, country wide. This expansion necessitated the enactment of the SACCO Societies Amendment Act, 2008, which would license deposit-taking SACCOs. Consequently, the SACCO Societies Regulatory Authority (SASRA) was established as the institution to regulate and supervise deposit-taking SACCOs.
Since 2008, KUSCCO has been lobbying the government to make some key amendments in the SACCO Societies Act, to promote faster growth of SACCOs. Some of these amendments were captured in the SACCO Amendment Bill, 2016. As part of raising awareness concerning the Bill, SACCO leaders met in Mombasa to discuss it in details. Members of the Parliamentary Committee in charge of Agriculture, Livestock and Co-operatives also joined them in the forum.
In a nutshell, this is what was discussed:

Challenges facing DTS
1. Liquidity
2. CIS sharing by DTS
3. Brand confusion and dilution- legal protection of the word SACCO
4. Suitability test for directors and senior managers: fit and proper tools for officers and directors needs improvement
5. Participation of DTS in National Payments System: Efficient settlement of customer transactions is a key factor in DTS business. Establishment Central Liquidity Fund.
6. Amalgamations, mergers and or co-operation
7. Deposit protection(Deposit Guarantee Fund)  in DTS

Implementation and impact of Banking Act to lending and SACCO Business

The Banking Amendment Bill has caused disruption in  mobile banking and accounts
The Bill was assented to by the President because Kenyans were disappointed and frustrated with lack of sensitivity by financial sector, particularly Banks. This was characterized by  high cost of credit, and low deposits rates.
Banks failed to live up to their customer promises as interest rates soared.
The amended Law seeks to improve consumer protection in the Financial sector by Enhancing transparency and disclosure. It also seeks to arm borrowers with information on cost of loans.

The Law will:
Regulate Banks and Financial Institutions interest rates
Cap Interest Rates charged on Loans 
Fix minimum rates of interest that such institutions must pay on deposits held
SACCO Societies Amendment Bill 2016

The contentious areas were:
1. Section 27 A
Proposal: Delete entire section
Arguments and suggestions
Classifying SACCOs as DTS separates them from the rest of the movement
It was proposed that transport sector to regulate themselves and avoid using the word SACCO
There is need for brand protection as every co-operative now has the word ‘SACCO’ in their name
Differentiate the FOSAs and BOSAs by renaming to ‘FOSA SACCOs’
Differentiate FOSAs from BOSAs by renaming them to ‘SASRA-licensed SACCOs’. This was rejected because of the Financial Services Authority which may be formed soon.
Differentiate FOSA SACCOs by calling them DT-SACCO. The name was found suitable because it is already in the public domain and will be accepted faster by the public.
Agreed: Deposit –taking SACCOs’ name to be changed to DT-SACCO

2. Section 27B
Arguments and suggestions
Reword the clause to eliminate the issue of ‘registration’ of SACCOs. This is a function of the Commissioner of Co-operatives.
It was noted that one year in the clause provided an adequate transition period for deposit-taking SACCOs to change name to DT-SACCO
Agreed: The clause remained unchanged.

3. Section 48A
Arguments and suggestions

At what point is SASRA to regulate directors?
Some SACCOs already have vetting committees –how will this be handled?
There was a feeling that the regulator is micro-managing SACCOs, while  all co-operatives are controlled by members
On Clause 48A it was suggested to re-word it to  ‘the Authority shall assist the AGM’
It was proposed that only directors should be vetted
Suggestion on 48A to read ‘The Authority may determine the suitability....’ was rejected because it does not give regulator full mandate to regulate as it should
It was noted that ‘academic qualifications’ in part c was not defined and would be brought out further in the regulations
It was agreed that SACCOs to elect and give elected board members to SASRA for vetting
Agreed: The clause remains the same.

4. Section 50
Arguments and suggestions
Leaders felt the section would be too harsh on rural SACCOs
It was not clear who ‘significant members’ are as outlined in the clause
The clause was important as Members of Parliament were legislating laws for posterity. Hence there was need to set minimum standards to promote growth of the SACCO sector
The section was deemed important to ensure SACCOs are run professionally and by competent people
Agreed: The section remained unchanged.

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

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