Draft bill would allow Sasra to regulate housing, land cooperatives
Housing and land cooperatives are facing strict government regulations as they grapple with investment fraud reaching into billions of shillings.
A sessional paper submitted by the Cabinet to the National Assembly recommends radical policy reforms, in response to fraud cases in which entities masquerading as legitimate investment cooperatives stole billions from Kenyans.
Agriculture Cabinet Secretary Peter Munya says a task force established to implement the national cooperatives policy has created a draft bill that will include investment and land cooperatives among businesses to be regulated by the Sacco Societies Regulatory Authority (Sasra).
“We need to change the law to bring those investing in the housing and land sectors under regulation.... Right now you can invest and take the money and very little will happen to you because the regulations are very weak,” Mr Munya said.
“That will bring order in the house and land-buying cooperative societies, where we have a lot of mess and some of them go to court to prevent us from doing anything.”
The proposed changes come as thousands of Kenyans have been duped into investing their lifetime savings in entities that promise huge returns only for the entities to close and disappear with investors’ cash.
More than 200,000 Kenyans have fallen prey to such fraudsters, some of whom still continue to operate and who sue anyone who attempts to expose them.
Mr Munya said Sasra had been sued by some of the entities after it tried to monitor their operations.
“Whereas the government is going to do its part in providing prudential oversight, members of the public must equally do their part in exercising utmost due diligence before transacting with any entity purporting to be a sacco,” he said.
He was speaking during the awarding of certificates to 25 Non-Deposit Taking Saccos by Sasra, following the June 30 deadline for the category of saccos to apply for certification.
Non-Deposit Taking Saccos keeping at least Sh100 million in members’ savings and deposits have been under Sasra regulation since January 1, 2021. The saccos had been given six months to apply for certification.
But out of 157 saccos that submitted applications by the June 30 deadline, only the 25 were issued certificates, with the authority saying many rushed to register at the last minute.
“Many of them rushed to submit applications on the last day and so processing the applications is ongoing, in different stages. The board has 90 days to complete the exercise,” said Sasra chairman John Munuve.
Of the 25, six are in the public sector, 16 in the private sector and three community-based. They hold investor money ranging between Sh120 million and Sh5.3 billion.
Mr Munya said that lack of regulation in the sub-sector over the past decade created loopholes that allowed the rise of cons in the industry. This is because since its establishment, Sasra has only been regulating Deposit-Taking Saccos.
“This legal lacuna created room for mischief in the public arena - by many sacco-like styled entities collecting savings from members of the public, promising good returns, only to disappear with such savings,” he said.
“The unfortunate incident relating to an entity that called itself Ekeza Sacco and which caused a lot of misery to members of the public is still very fresh in our minds.”
The Sacco Societies (Non-Deposit Taking Business) Regulations, 2020, which came into force on January 1, 2021 and empowered Sasra to regulate the sub-sector are meant to ensure savings and deposits collected from the public are protected.
The regulations also prescribe minimum capital and liquidity requirements for the saccos, prohibit investments outside the sacco’s core mandate, provide strict loan collection practices to prevent loss of members’ funds and require the saccos to submit returns to Sasra periodically.
