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State To Launch Sacco Fraud Investigation Unit


There are plans to ensure that by next month the Minister for State Department of Co-operatives (SDC) will launch a proposed Savings and Credit Co-operative Society (Sacco) following a directive to do so by President Uhuru Kenyatta in July last year.

By doing so, President Kenyatta had hopes that it would not only contribute to the country’s economic growth and on achieving policy interventions such as the Big Four Agenda, with an emphasis on availing financing for affordable housing, as has been the case of Harambee Sacco, which in early February announced the intention to construct 1,000 affordable houses for its members at an eight percent interest rate, based on financing from Kenya Mortgage Refinancing Company (KMRC).

He had stated this while attending the 97th International Co-operative Day, where he had observed that the Kenyan co-operative movement has an asset base of more than Kshs 1 trillion, thus making it one of the seven best in the continent.

While Saccos have been able to help small-scale farmers by shielding them from the exploitation of middle-men, according to The Standard newspaper in an editorial that was published on October 8th 2019, they are also vulnerable to the exploitation of management, with the aim of the state to close 2,200 of them that were are either financially ailing or unstable.

Principal Secretary for State Department of Co-operatives (SDC) Ali Noor Ismail says that there are plans to operationalize the SSFIU at an advanced stage and the new unit will be fashioned in the lines of the Banking Fraud Investigation Unit (BFIU) to deal with fraudsters within the Co-operative sector.

The new Sacco fraud unit will be established under the Sacco Societies Regulatory Authority (SASRA), said the PS when he addressed delegates attending the giant Harambee Sacco at the Kenya School of monetary Studies, Ruaraka.

The PS said the new National Co-operative Policy (NCP) , also directed by President Kenyatta, had also been formulated , and its implementation will start soon.
He said tvvvhe NCP will focus on the review of the legal and regulatory framework of Saccos, promotion of governance in co-operatives , observance of membership rights, refunds of member shares and remittances of members’ deductions by employers.

The PS says the new regulations will make it highly punitive for employers to withhold deductions of their employees.

Under the NCP, the Department of Co-operatives has facilitated the registration of Kenya Society of Professional Co-operators (KSPC), an organization whose objective is to promote professionalism and observance of the co-operative philosophy, principles and practice.

But Saccos in Kenya have come under their own set of challenges, maiinly because they are facing financial difficulties that have seen some of them going under. Examples include Ekeza and Nitunze Saccos.

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Stakeholders in the sector, such as the Group General Manager for Co-operative Business at CIC Group, Mr Richard Nyakenogo, have previously stated that the National Co-operative Development Policy could be of use to the sector by giving it a dual operation for running Saccos under the county and national governments.

The KSPC, which was recently launched by then Trade, Industry and Co-operatives Cabinet Secretary Peter Munya, is currently developing its operational tools and guidelines.

“To facilitate certification of members, the organization has finalized arrangements with KASNEB to administer the Certified Cooperative Professional (CCOP) exams,” says the PS.

He encouraged the Sacco fraternity to support the KSPC by enrolling as members as well as informing the public, especially the student community on the need to belong to the professional body.

The PS told Sacco managers to always recruit professional staff in their organizations and leverage on Information Communication Technology like mobile banking platforms to both enhance their efficiency in service delivery, attract more youthful members and reap maximum benefits.

He said the SDC had identified key priority growth areas that will enable the co-operative movement participate effectively in the delivery of goals under the Vision 2030 and the Big Four Development Agenda.

These growth areas include the promotion of housing by encouraging the development of mortgage products by Saccos, promotion of diaspora co-operatives with the aim of increasing savings for local investments and the promotion of agro industrial hubs to promote and enhance manufacturing and exports by co-operatives.

Harambee sacco is ranked among the largest Co-operative entities in terms of asset portfolio after Mwalimu, Stima and Police Saccos.

The Society’s total assets grew by a 21 per cent reap from 26.3 billion in 2018 to 29.5 billion in 2019.

On February 19th 2020, the Acting Commissioner for Co-operatives, Mr Geoffrey Njeru, noted that one of the challenges faced by the co-operative movement and other financial players such as banks is their insistence to hang to technology that is obsolete, thus falling victim to such vices as cybercrime.

According to Information Technology (IT) firm, Serianu, cybercrime in banks and Saccos, has led to the loss of Kshs 29.5 billion as of the year 2018, which has either occurred through hacking, e-mail phishing or identity theft.

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