Global crisis likely to hit Saccos — Nyagah

The Government has warned of serious financial crisis in the co-operative movement due to the global economic meltdown.

Co-operative Development Minister Joseph Nyagah said the recession in Europe and US is likely to alter the operations of Savings and Credit Co-operative Societies (Saccos) if they fail to cushion themselves from any possible fallout.

"We need to be prudent in financial management and strictly adhere to lending policies to avoid the risk of non-payment of loans.

"Cases of over loaning, weak-governance and high expenditures must be dealt with if we have to remain afloat," advised Nyagah.

He said the Sacco Societies Act had been enacted into law and his ministry had appointed a taskforce to work out modalities of implementing the provisions of the Act.

The minister said Saccos should monitor alerts from Central Bank to stay abreast with the dynamics of the financial sector.

"In this era of ICT and free market enterprises, co-operatives will only remain relevant if they adopt strategies that take cognisance of quality, customer preferences, legal requirements and information dissemination," said Nyagah.

He was speaking at the 30th Annual Delegate’s Meeting of Mwalimu Sacco Society.

Nyagah also called for strengthening of Saccos by strict adherence to relevant laws and regulations, establishment of well-controlled internal supervisory and audit departments.

He urged Saccos to embrace reforms to turn around the institutions and make them competitive. He emphasised the need for responsible leadership for efficient and explicit service delivery.

Meanwhile, Mwalimu Sacco Society capital performance increased from Sh9.5 billion in 2007 to Sh10.3 billion last year.

The amount available for distribution to members’ increased by 9.4 per cent.

The Sacco will distribute interest on members’ deposits at 8.6 per cent and pay dividends at 15 per cent.

The minister attributed improved performance to good management.

Despite the economic challenges, the minister said Saccos assets grew by 20 per cent, raising from total savings Sh150 billion last year to Sh180 billion this financial year.

"This also resulted in introduction of more front office services activities in urban and rural Sacco societies," he said.

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