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Sacco bill will save depositors from pyramid schemes

Parliament is fast-tracking the passage of Sacco Societies (Amendment) Bill, 2018 in a bid to protect depositors from mushrooming pyramid schemes posing as investment Saccos Chairman, Parliamentary Committee on Trade, Industry and Cooperatives Kanini Kega said the parliament will send the bill which is currently at committee stage to the upper house for approval in the next month.

“We want all saccos to register as deposit-taking and share bi-monthly profiles with industry regulator Sacco Societies Regulatory Authority (SASRA) for scrutiny to weed out fraudsters who are stealing from depositors,’’ said the Kieni member of parliament.

Commissioner of Co-operatives, Mary Mungai cancelled registration certificate of Ekeza Sacco and ordered the freezing of all Ekeza Sacco bank accounts closely associated with land reseller Gakuyo Real Estate, and operations across its 23 offices stopped.

The Sacco is valued at over Sh3 billion with at least 80,000 members across the country. The Sacco was only mandated to operate in Kiambu County.

Only 50 Saccos were licensed in deposit-taking business by Sasra, yet primarily most Saccos are taking deposits from members.

Under the proposed amendment, Sacco societies will be mandated to share credit information with the Credit Reference Bureaus (CRBs) licensed and regulated by the Central Bank of Kenya. This will require them to share both positive and negative credit information.

The Sacco Societies Act, 2008, only allows Saccos to share positive credit information amongst them and is optional for them to share negative credit information.

Speaking while submitting views to the parliamentary committee, Kenya Union of Savings and Credit Co-operative Union managing director George Ototo supported the move to standardize Saccos but said the 12 months period given to existing Saccos to comply is limited

Name change and rebranding is a process and costly. While we are not objected to the idea, plead that more time be allocated to our members who are already in the market. The clause that require Sacco board members to have certain academic qualification is oppressive,’’ said Ototo

His sentiments were shared by representatives from Cooperative Alliance of Kenya and Alphonse Kaio of Mwalimu National Sacco.

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