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1.     The attention of the Sacco Societies Regulatory Authority (SASRA) is drawn to the contents of a recently published report dubbed, ‘A Technical Solution to a Political Economy Problem: FSD Kenya’s Intervention in the SACCO Sector,’ by FSD Africa. This report published in February 2017 draws substantially from a Sacco subsector analysis done on behalf of FSD Kenya in 2014 by A2F Consulting and completed in March 2015 with contentious findings which could not be published. SASRA wishes to assure the Sacco members and the public in general that the Sacco subsector is in sound financial state.

2.   The simplicity of the Kenya Sacco model has made the Saccos popular across all households regardless of social-economic status. This situation has been attained in spite of fairly developed Kenyan financial sector. The publication portrayed the Kenya Sacco model as high risk and fundamentally flawed thereby putting to risk member deposits. These inaccurate conclusions ignored the success registered by hundreds of Saccos that have continued to provide much needed financial services to Kenyan citizens. The few incidences of Sacco failures cannot therefore be attributed to the operating model but more to mismanagement. 

3.    The growth and development of the Front Office Services Activity (FOSA) which offers quasi banking services is a testimony that the Saccos are responsive to member and market demands. In its wisdom, the Government responded to this development by introducing the prudential regulatory framework to enhance sound management practices and safety of member deposits. The Government’s choice to have a dedicated regulator for the Sacco sector was deliberate to avoid disrupting the Sacco model and potentially reversing or losing the gains made in deepening financial inclusion through the Saccos.

4.   Evidently, the new regulatory framework marked a new beginning for a sector that had operated without clear, non-ambiguous financial and operating standards for nearly half a century. It is therefore unrealistic to expect immediate change in governance practices in under five years, i.e 2011 to 2013. Recognizing this challenge, the drafters of the Sacco Societies Act and Regulations provided four years transition period within which SASRA was to license all eligible Saccos that were operating FOSAs at the commencement of this law which was June 2010.

5.     As at December 2016, the 175 Saccos licensed and regulated by SASRA had a combined net assets of Ksh.393billion based on the unaudited financial statements, up from Ksh.301 billion in 2014. This growth is funded by deposits, share capital and retained earnings.   Capital a key measure of financial health of a Sacco grew by over 50 per cent from Ksh.33 billion in 2014 to Ksh.58 billion by close of December 2016. The 175 Saccos were serving a reported figure of 3,456, 975 members.  Below is a table of the performance trend over the last three years.


  2016* 2015 2014
Number of DTS 175 176


Membership 3,456,975 3,145,565


FINANCIALS (KShs. Million) (KShs. Million) (KShs. Million)
Total Assets 393,136 342,848


Total Deposits 272,749 237,440


Net Loans & Advances 282,733 251,080


Capital Reserves 67,555 50,856


Core Capital

58,174 41,712




6.  The regulatory framework provides prudential standards against which the financial health of a Saccos is assessed on a continuous basis using periodical reports submitted to SASRA for this purpose. Besides, SASRA can and does ask for additional quantitative and qualitative information to supplement the period returns. 

      In aggregate terms, the key prudential standards including capital adequacy, quality of loan assets and liquidity are satisfactory indicating that the Sacco subsector is financially healthy, courtesy of the reforms commenced in 2010 when the new Sacco Societies Act of 2008 commenced.  Below is a table of the key financial soundness indicators from 2014 to 2016.




7.  Recognizing that non-compliance by individual Saccos is non-avoidable, the legal framework has provided mechanism of dealing with such to enforce compliance. This includes issuance of administrative directives, conditional license or revoking of license all together. Licensing decisions are communicated to the public through notices in the local dailies at the beginning of the year and as necessary. Further detailed report on performance of the deposit taking Saccos is published annual and can be found at www.sasra.go.ke


8.       The diversity of Kenya deposit taking market provides Kenyans with the choice of different institutions to meet their financial needs in terms of payment services, savings and credit. It is indeed Government policy to preserve this diversity while instituting appropriate regulations to enhance competition in a sustainable manner. Thus having Sacco members also access banking services does not imply they do not need a Sacco. It is noteworthy that the largest deposit taking Saccos trace their original membership from public servants, majority of whom have bank accounts. The two financial service providers are complementary and assist the households to deal with diverse financial needs.


9.    The importance of Saccos to households in Kenya has been variously confirmed by independent reports including the Finaccess household surveys undertaken jointly by Central Bank of Kenya, Kenya National of Bureau of Statistics and FSD Kenya. The 2016 Survey in particular indicated that amongst the formal financial service providers, Saccos are fairly popular with households for not only credit but also in Savings. See tables 10a and 10b below are extracts from the 2016 Finaccess Household Survey.


SASRA, in keeping with the dynamism of the deposit taking Saccos is committed to working on policies to mitigate identified challenges in order to ensure sustained growth of deposit taking Saccos and . The regulatory reforms is a process especially for an industry that was hitherto not under stringent legal framework. SASRA will continue to engage with the Sacco industry, other Government agencies and development partners to sustain the reform momentum.


10.  SASRA is thus pleased with significant growth made by the Saccos under its regulatory mandate and wishes to assure the Kenyan public that the Sacco subsector has shown considerable level of stability and that we remain committed to effective regulation of the sector and protection of public interest in order to maintain confidence in the use of Sacco services accross the country.



John Mwaka



Date: 24th February, 2017







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