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Governance system a threat to co-operative movement, warns Kuscco

By By JAMES ANYANZWA | October 21st 2013


Operations of Savings and Credit Cooperative Societies (saccos) have come under threat from the devolved system of government with fears of eventual collapse.

Kenya Union of Savings and Credit Cooperatives (Kuscco) says cross county saccos, which operate under different legislations, are likely to lead to disintegration of national saccos. “Devolution itself has thrown us into disarray because we do not have clear policies. We also have fear of disintegration after the transition period,” says Kuscco Managing Director George Ototo. Devolution, he noted, has created counties with different legislations pertaining to commerce and co-operatives.

“This means that county saccos with different legislations are likely to lead to the disintegration of the national saccos,” he added.

Mr Ototo also singled out the taxation of the services offered by saccos as another impediment to the growth of the cooperative movement. In an amendment to the Customs and Excise Act through the Finance Bill 2013, Cabinet Secretary Henry Rotich introduced 10 per cent excise tax on money transfers in an effort to finance growing government expenditure with revenue shortfall in the next fiscal year (2013/2014) pegged at Sh330 billion.

Money transfer

The target includes money transfer services offered by commercial banks, mobile phone operators, saccos, microfinance institutions and Post Office Savings Bank.

The sacco fees subjected to excise duty include membership fees, loan processing fees, statements, withdrawal charges and commissions on automated teller machines (ATMs).

However the Parliamentary Committee on Finance, Planning and Trade chaired by Benjamin Langat last week said it would introduce amendments to the Customs and Excise Act in order to exempt services offered by saccos from taxation.

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