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The co-operative movement is poised to offer members a third payment system, similar to that offered by banks and non-cash payment systems including Automated Teller Machines (ATMs) and credit cards.

It will be made possible through Kenya Saccos’ Central Liquidity and Shared Services Co-operative Society Limited (KSCLCS) that will be regulated by the Sacco Society Regulatory Authorities (Sasra).

The initiative was registered in June last year and allows several savings and credit co-operatives (Saccos) to come together and share core banking services, enabling them access the National Payment System even as they maintain their identity.

The Saccos will have a shared fund management platform that supports inter-Sacco lending and cross-Sacco funds transfer amongst the primary members (Sacco’s). Already, two entities- Co-opTech fronted by the Co-operative bank with 30-member Sacco’s and the Sacco Central, with over 50 tier1 Sacco’s and fronted by Sasra have been launched.

While speaking in Nairobi over the weekend, Co-operatives and micro-small and medium enterprise development Cabinet Secretary Simon Chelugui said the Sacco’s will be able to issue cash and cheques to their members, inter-lend amongst themselves and even have a central clearing house. Currently, Sacco cheques are issued through commercial banks, principally the Co-operative bank of Kenya.

“This is the idea that will now push Kenya forward, aggregate, consolidate all the gains that we have made individually to a collective pool that can be the impetus to be the third payment system,” he said. Chelagui was speaking during the inauguration of the Nairobi-based Sacco Central’s annual general meeting.

As at today, Sasra regulates a total of 359-Saccos consisting of 176 deposit taking Sacco’s and 183 non-withdrawable deposit taking Sacco’s.

By February 2023, the 359 Sacco’s had total assets amounting to Sh894 Billion, mobilized a savings portfolio amounting to Shs625 billion and a loan portfolio of Shs693 Billion. They were serving slightly above 6 million direct members and providing direct employment opportunities to 11,188 citizens, the CS said.

Prudent management

Chelugui said the aim of the framework was to entrench prudent management practices in Sacco business and protect the savings and deposits so mobilized from Members.

“There could be a third or fourth. There could be a shared service for coffee farmers, for milk farmers. There could be one for mama mbogas coming together. The most important thing that Sasra needs to do is to set the rules and regulate these platforms and keep on improving so it is not a free fall,” Chelugui said.

According to the CS, the platform is scalable, to enable the Sacco’s tap into international remittance payment organizations like VISA and American Express and directly receive diaspora remittances, which by the year to March 2023, had increased to Sh541billion from Sh526 billion in 2022.