State to cushion Saccos with guarantee scheme to insulate saccos
By Harrison.Kivisu, May 11, 2023The government will set up a guarantee deposit fund to protect monies held in the Saccos as a safety measure for member’s deposits.
Speaking in Mombasa on Wednesday, Cooperatives and Small Enterprises Cabinet Secretary, Simon Chelugui said the guarantee fund will help saccos insulate themselves from economic shocks.
Deposit guarantee schemes (DGS) usually reimburse a limited amount to compensate depositors when banks fail. A fundamental principle underlying DGS is that they are funded entirely by banks, and that no taxpayer funds are used.
“We will promote a guarantee scheme called deposit guarantee fund that will protect monies held in Saccos so that we can assure members of their safety, just like what is happening in other financial institutions,” said Chelughui.
Chelugui said the ministry is building the blocks to establish the fund that will be well regulated.
Cooperative Bill
The government is banking on the Cooperative Bill that is before the Cabinet to align the act with the agenda of the Kenya Kwanza bottom up economic model.
“We have gone round the country, collected views, so the cabinet is considering it and it will transition to the parliament, and I want to encourage all saccos to maintain good governance,” said Chelugui adding that by the end of this month the bill will be in the parliament.
The CS made the remarks after officially re-launching the Ports Sacco, formerly known as Mombasa Port Sacco.
The Mombasa-based Sacco, which was initially dedicated to employees of the then Kenya Cargo Handling Services Limited, diversified membership to grow its membership from 11,741 in 2022 to 16,800 in 2023.
Ports Sacco Chief Executive Officer Dedan Ondieki said the relaunch was part of Sacco’s commitment to driving financial inclusion across the 47 counties.
“Our expansion beyond Mombasa is part of our strategy to be diverse and inclusive as we renew our focus to empower current and new members to take control of their financial future. In addition, our vision is to reach those unable to access financial services from conventional institutions,” said Ondieki.