Weak controls leave many Saccos bleeding

Some of Kenya’s savings and credit cooperative societies have higher risk of collapse, a new report warns. A new study by Financial Sector Deepening (FSD) indicates that despite the creation of a dedicated industry regulator and laws to professionalise the sector, Kenya’s Sacco industry remains as weak as it was 12 years ago.

The competition to increase clients and boost savings has seen many Saccos turn to existing or new members in an attempt to raise capital putting a strain on liquidity. “Whilst increasing Sacco assets ‘on paper’, this strategy has rapidly increased the demand for borrowing and led to a slackening of loan conditions and applicant vetting,” explained a report by financial think tank Financial Sector Deepening (FSD).