Counties, employers owe saccos Sh1b in arrears

The debt has affected liquidity, hampering ability to meet financial obligations

County governments and employers owe Savings and Credit Co-operatives (SACCOs) in excess of Sh1 billion in unpaid remittances which cash has accumulated over the last six years affecting their ability to operate effectively.

Despite being deducted directly from their salaries, most employers do not remit employee contributions to Saccos, with some arrears dating back to 2013.

Speaking during the 96th Ushirika Day Celebrations at Uhuru Park Nairobi, Cabinet Secretary Ministry of Industry, Trade and Co-operatives Adan Mohamed said to enable credit unions to meet their financial obligations, the national government will now step in to help the sub-sector recover the cash.

Kenya has over 22,000 registered co-operative societies, commanding a membership of more than 14 million Kenyans. The co-operatives have mobilised up to Sh630 billion in deposits, with an asset base of over Sh816 billion, and a loan portfolio of over Sh500 billion.

“As a government we are aware that a number of counties have not been remitting member deductions to the national Saccos. We have vowed to help the financial cooperatives recover the debts so that they can improve their liquidity,” Adan said.

Last month Commissioner for Cooperatives Mary Mungai warned that counties risk having their money suspended unless they paid accumulated debts. However, county governments blame delays on low liquidity levels.


Saccos say failure by counties to remit the deductions has interrupted saccos’ liquidity and ability to meet financial obligations frustrating the saccos operations and saving culture among Kenyans.

Most affected are saccos that tap membership outside the normal common bond, and those with members working in counties. The money is supposed to be paid to the saccos through the check-off system.

The Cooperative Societies Act Cap 490 empowers the commissioner for cooperatives to attach funds of employers or seek legal redress against employers not remitting members’ deductions.

“Section 35 of the Act stipulate that in case of non-remittance the commissioner for cooperatives has the mandate to take the employer to court or give an agency notice or even attach funds of employer which also attracts an interest of five per cent cumulatively,” states the Act.

Some of the Saccos grappling with the delayed remittances include Harambee Sacco, Afya Sacco, Ukulima Sacco, Stima Sacco and Mwalimu Sacco, among others. For example, Shirika Sacco is owed Sh22 million by three counties with Muran’ga county leading at Sh9 million.

Attributing the challenge of remittances to dwindling cash flow, Murang’a County Executive in charge of Finance Robert Waweru agrees counties owe credit unions huge debts, but hope to clear the bills soon.

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