Employers’ pay down Ksh.1.7 billion in un-remitted SACCO funds

Employer’s paid down Ksh.1.7 billion in un-remitted SACCO funds last year to bring down the arrears to Ksh.3.4 billion from Ksh.5.1 billion in 2020.

Despite the notable reduction in the non-remitted deductions, the SACCO sector regulator-SASRA states the arrears still have a significant negative bearing on the operations of the credit & savings cooperatives.

“The outstanding amounts of money are still very high and continue to have negative impacts on the financial performance and stability of SACCOs. The reduction of the non-remitted funds is however evidence that the government’s efforts to reduce the menace.

63.3 per cent or an equivalent Ksh.2.2 billion of the non-remitted funds covers deductions geared to meet loan payments, a situation which has driven up the rate of Sacco’s non-performing loans (NPLs).

36.8 per cent of the un-remitted funds or Ksh.1.3 billion meanwhile cover BOSA deductions.

During the year, deposit-taking (DT) SACCOs owed the highest proportion of non-remitted funds at Ksh.3 billion.

Public Universities and Tertiary Colleges continue to hold the bulk of non-remitted deductions at Ksh.1.3 billion or an equivalent 38 per cent of arrears.

Private sector firms meanwhile cover Ksh.839.5 million of the deductions while County governments & assemblies and government parastatals have arrears of Ksh.640.2 million and Ksh.277.6 million respectively.

To ease the non-remittance by employers, President Uhuru Kenyatta issued a circular in November 2019 directing Ministerial and State Departments (MDAs) in the national government to ensure that financial obligations such as PAYE, pensions and SACCO deductions are budgeted and paid.

During the same month, SASRA issued a general advisory which provided an in-depth internal administrative measure for SACCOs to adopt and implement as a means of reducing incidences of non-remitted funds, especially from perennial defaulters.