Risky memberships in focus as weight of bad loans chokes SACCOs
Distribution of NPLs by DT-SACCO cluster in 2017 (NPL ratio %)
NPLs was highest among community-based SACCOs,as farmer-based SACCOs followed in the list of loan defaulters
Community-based deposit-taking saccos are hardest hit by non-performing loans (NPLs), new data by the regulator showed, signaling the risks of loose membership.
They saw their NPL ration rise to 15.91 per cent in 2017 from the 9.84 per cent recorded the previous year, data in the Sacco Societies Regulatory Authority (SASRA) showed.
“This underscores the difficulty with which these SACCOs whose field of membership is usually quite loose are normally operating,” the regulator said.
An increase in demand for savings products has seen the emergence of many community SACCOs, most of which offer borderless membership unlike was the case before when SACCOs were modelled under umbrella associations, social organisations and companies, with membership restricted to staff and officials.
Farmer-based deposit- taking SACCOs recorded the second highest NPLs ratio at 11.42 per cent in 2017 despite declining marginally from the 13.6 per cent the previous year.
The NPLs among the government-based deposit-taking SACCOs rose to 5.95 per cent in 2017, from 4.28 per cent the previous year.
