Proposed law to block fraudsters from Kenyan Saccos’ boards
Tuesday March 06 2018
A sign outside Wananchi Sacco branch in Othaya town in Nyeri. Individuals with criminal records will have no place on the boards of Kenyan savings and credit co-operatives if parliament passes a proposed law. FILE PHOTO | NATION
Individuals with criminal records, fraudsters and directors of failed co-operatives will have no place on the boards of Kenyan savings and credit co-operatives if parliament passes a proposed law.
Those convicted or are under investigation for financial impropriety, fraud, corruption or economic crimes are also not fit to hold an office in another Sacco.
This proposal is part of the Sacco (Amendment) Bill, 2018, which has been gazetted by the National Treasury, seeking to streamline the operations of Saccos that hold over $5 billion of members’ savings.
The vetting of directors and other officers seeking positions in Saccos will be conducted by the Sacco Societies Regulatory Authority (Sasra).
The government’s renewed battle against mismanagement and abuse of office by Sacco directors and officers has received the backing of the umbrella body Kenya Union of Savings and Credit Co-operatives Ltd (Kuscco).
“As a union we have always championed good corporate governance and if you don’t oversee operations of people then governance can be a problem,” said Kuscco managing director George Ototo.
Public interest
According to the Bill, a person who has acted in a manner that casts doubt on his or her competence or who has violated the law by failing to protect the interest of the public from financial loss due to dishonesty, incompetence or malpractice will be disqualified by the regulator.
The Bill also proposes mandatory continuous development courses, training and certification for the existing directors.
The new regulatory changes are expected to impose stricter controls in a sector that has developed significantly over the past few years with increased complexity and size of institutions
Kenya has over 5,000 registered Saccos with more than $5 billion in savings and an asset base of $6.9 billion.
Plans are also underway for Saccos to run their own inter-Sacco market where they can lend and borrow from each other at reasonable rates just as commercial banks do in overnight lending.
The need for Saccos to participate in the national payments system has been informed by their expansion over the past decade with their assets of the target surpassing that of some small banks.