MINISTRY OF CO-OPERATIVE DEVELOPMENT AND MARKETING HIGHLIGHTS OF SACCO SOCIETIES ACT Prepared by GEOFFREY NJANG’OMBE DDCA

PROBLEM AREAS The major problem areas facing Saccos include the following; Inadequate Legal and Regulatory frame work i.e. Saccos had not been adequately covered in the C.S.A of 1966,1997 and 2004. Lack of a Development Strategy framework for Sacco Societies Low adoption of International Performance Standards Lack of Disclosure requirement standards Low adoption of Information and computer technologies Poor Human Resource Management leading to high staff turn over. 7

JUSTIFICATION FOR THE SACCO SOCIETIES ACT tremendously growth to about 3.7million members. Deposits mobilization to more than ksh.200 billion and credit disbursed of about ksh.120 billion. The 214 Saccos with FOSAs diversifying into specialized bank like activities which include deposit taking, saving facilities, debit card business(ATM) and money transfers. 8

JUSTIFICATION FOR THE SACCO SOCIETIES ACT Cont’d To ensure soundness and safety of depositors funds and maintain public confidence in SACCOs, they needed a specific law. In this regard the SACCO societies Act, 2008 was made 9

ASPECTS COVERED BYTHE SACCO SOCIETIES ACT Establishment of a Regulatory Authority. Licensing of SACCO Societies. Governance of Licensed SACCO Societies. Regulation and Supervision of licensed SACCO Societies. The Deposit Guarantee Fund. Miscellaneous (Relationship with the co-operative Societies Act ,penalties and transitional provisions). schedules 10

FUNCTIONS OF THE AUTHORITY license Sacco societies to carry out deposit –taking business; regulate and supervise Sacco societies hold, manage and apply the general Fund created under sec.16 levy contributions in accordance with sec.15 do such other things as may be directed by minister or conferred by Act 11

APPLICATION FOR LICENCE. within twelve months on commencement of the Act Application in the manner prescribed as per regulation 4(2) Capital adequacy: core capital not less than 10m,core capital not less than 10% of total assets, institutional capital not less than 8% of total assets7core capital of not less than 8% of total assets

Governance requirements Code of conduct Proper records that reflect true and fair position of the Sacco’s financial condition appropriate policies in areas such as human resource,credit,investment,savings,liquidity ,risk management etc establish audit and credit committees among others

Cont. Directors not to hold position in more than one Sacco licensed under the Act. Saccos to appoint auditors qualified as per sec.45,approved by AGM and appointed by Authority Auditors be picked from list approved by Authority

Regulation and supervision Sacco to furnish any reports required by Authority Authority may use enforcement and administrative actions to ensure compliance(reg.67)

Deposit Guarantee fund Applicable to all licensed Saccos Coverage to a limit of shs.100,000

Miscellaneous Provisions Application of license within twelve months fulfill capital requirements within 4 years Divest from non-core businesses to prescribed limit within 4 years Regularize external borrowings to prescribed limit within 4 years

SCHEDULES First Schedule: forms 1-Application for licence 2-Fit & proper test 3-licence Second Schedule: 1-capital adequacy return 2-liquidity statement 3-statement of deposit return 4-risk classification of assets and provisioning 5-investment return

Cont.. 6-statement of financial position 7-statement of comprehensive income 8-other disclosures

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