Saccos in Mt Kenya teach members good money habits

Members of the Winas Sacco listen to speakers during a recent AGM.

The managements of various Saccos in Mt Kenya region have intensified campaigns to educate their members on skills for prudent management of borrowed funds in a bid to tame increasing cases of default in loan payments.

Most Sacco are still grappling with recovery of funds held in defaults by borrowers mainly attributed to prevailing economic hardships worsened by increased taxes by the Government.

The taxes including the housing levy coupled with increase in the cost of living, fuel and essential commodities came  just as most financial entities were struggling to recover from economic doldrums’ wrought to the scene  by the  Covid 19 pandemic.

But success in adherence to prudential guidelines as issued by Saccos Regulatory Authority (Sasra) and use of internal controls to protect members’ funds saw some Saccos such as Ollin Sacco record low loan defaults cases.

Saccos such as Ollin and Winas in Kirinyaga and Embu respectively according to supervisory team reports intensified campaigns to educate their members on the need to remain mentally healthy as this was partly what led to success or failure in management of borrowed monies.

Edith Ngatia, Ollin’s Sacco supervisory chairman reports that to tame mismanagement of funds by borrowers which could eventually have negative effects on the entity’s financial stability due to default on loans education days had been increased.

She says the quality of education forums had continually been improved to build members capacity and improve their welfare with the topic of mental wellness included. Unlike in the past mental wellness today remains a key areas of family financial management skills and has been widely embraced by Saccos.

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Winas Sacco supervisory committee team led by Robert Ndwiga reported that a loan uptake drop by more than KSh584 million was hugely due to economic hardships, new taxes, retirements, multi-borrowing and spiral effects of the Covid 19.

The team reported that although the Sacco had strictly followed rules and policies of loan issuance monies in default between the years 2022-2023 stood at KSh5.1 million a decrease as compared to 2022 when defaulters held more than KSh9.5 million.

Although the funds in default was reduced by KSh4.4 million, the teams reported engagement of private debt collectors and law firms to assist in the recovery of monies held out in default against a background where members are fully aware of regulations and repercussions of failure to pay loans.

Said the team, ‘We urge the members to avoid loans’ default as it may not only hit their credit score hard but may also lead to legal tussles.”

However the supervisory team generally appreciated an upward trend of good financial performance where financial stability had been recorded with liquidity stabilized, achievements attributed to prompt payment of loans and interest.

Some weaknesses in expansion of new members’ enrolment which remains key to growth in loan portfolio has been attributed to failure by some members to take education days serious.

A growing number of Winas Sacco members it has been noted leave education day venues soon after registration hence missing crucial information on offer by experts.

By Robert Nyagah

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