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Universities top list of Sacco remittances defaulters
Sasra chairman John Munuve at a function in July. The Sacco regulatory authority released its 2020 supervision report on Thursday.
What you need to know:
- Of the total non-remitted funds in 2020, public universities and tertiary colleges led by failing to remit Sh2.9 billion.
- The higher learning institutions were followed by private sector institutions which failed to remit Sh846.5 million.
Public universities and colleges top employers who deduct money from their employees but fail to remit the same to Saccos.
The Sacco Societies Regulatory Authority (Sasra) 2020 annual supervision report shows that employers failed to remit a total of Sh5.05 billion deducted from workers for loan repayments and contributions to Saccos.
This was a significant increase from the Sh3.87 billion that was owed to the industry over a similar period in 2019.
Of the total non-remitted funds in 2020, public universities and tertiary colleges led by failing to remit Sh2.9 billion (58.4 per cent of the total).
“It is however a concern that the amount owed by public universities and colleges has continued to increase over the years, with a sum of Sh2.86 billion reportedly owed in 2019, implying that very little is being done by these public institutions to reduce the cumulative amounts owed,” Sasra notes in the report released on Thursday.
The higher learning institutions were followed by private sector institutions which failed to remit Sh846.5 million, national government ministries and constitutional commissions (Sh581 million) and county governments and assemblies (Sh481 million).
Non-performing loans
The greatest proportion of the non-remitted funds was meant for loan repayments, contributing greatly to an increase in non-performing loans (NPLs), which increased from Sh25.79 billion in 2019 to Sh39.86 billion.
“The fact that a huge proportion of the non-remitted deductions owed by various employers are on account of loan repayment deductions is a matter of continued concern to the authority as it undermines the loan performance as well as liquidity within the DT (deposit-taking)-Sacco system,” Sasra noted.
Of the Sh5.05 billion non-remitted funds in the entire industry, Sh4.3 billion were funds meant for loan repayments, while Sh732 million were back office services activities deductions.
Sasra accuses the institutions of disregarding a circular from the Presidency issued in November 2019 to ministries, departments and agencies to budget for all financial obligations (including Sacco deductions) and paying them in compliance with statutory timelines.
The authority now says it will pursue other legislative reforms to remedy the situation.
In the report, Sasra also reported a trend where large DT-Saccos continue to capture the market, threatening the existence of smaller ones, particularly those with deposits less than Sh1 billion.
The authority reports that the industry has 23 DT-Saccos with deposits of over Sh5 billion, 53 with deposits of between Sh1 billion and Sh5 billion, and 99 with deposits below Sh1 billion.
However, the total deposits in the hands of the 23 Saccos represents 61.64 per cent of the total deposits in the industry.
