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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

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

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

13. 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

14. 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

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

16. THANK YOU FOR LISTENING TO ME MAY GOD BLESS YOU MIGHTLY