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Kenya’s Saccos accuse members of betrayal over rate cap law

Sheria Sacco Chairman Justice Patrick Kiage

Savings and Credit Co-operative Societies (Saccos) feel betrayed by members who sold their loans to banks after the interest rate cap was introduced last year.

Saccos lost loans in the last quarter of last year and assets, with some being forced to make a huge cut on interests to match the incentives that were being offered by banks.

The World Council of Credit Union 2015 Statistical Report shows that Kenya’s Sacco movement has over five million members, making it the largest in Africa.

“Even as the Board tries to bring members back home, we find our efforts frustrated by some members’ running back to the banks’ false embrace,” said Sheria Sacco Chairman Justice Patrick Kiage.

He said although the rate cap law was not meant for the Sacco movement, it has had a direct bearing on the way it does business. Sheria Sacco lowered its interest rate from an average of 15 per cent to 13.8 per cent in the wake of the new rate cap regime.

“We were forced to revise downwards our lending rate and this adversely affected the incomes of the Sacco and our overall performance and growth,” he said. Unaitas Sacco lowered interest on loans from between 15 and 18 per cent to 14 per cent. 

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