Sugar woes sink sacco as reg­u­la­tor warns worse to come

Business Daily (Kenya) - - CORPORATE NEWS - Pa­trick Alushula­tion­

Mu­mias-based Ni­tunze Sacco, for­merly Mu­mias Out-grow­ers Sacco So­ci­ety, lost its li­cence be­cause mem­bers de­faulted on the en­tire Sh160 mil­lion loan port­fo­lio as the sugar in­dus­try ran into prob­lems.

Ac­cord­ing to the Sacco So­ci­eties Reg­u­la­tory Author­ity (Sasra), Ni­tunze failed to meet its fi­nan­cial obli­ga­tions largely due to the fact that nearly all it mem­bers that Mu­mias-based Ni­tunze Sacco lost to loan de­fault­ing mem­bers, as well as its li­cence were su­gar­cane farm­ers, many of whom ob­tained loans from the sacco hop­ing to re­pay us­ing pro­ceeds from farm­ing. How­ever, the fail­ure by fac­to­ries such as Mu­mias Sugar to pay farm­ers their dues led to mass aban­don­ment of cane farm­ing, de­duc­tions from the cane pro­duce meant to re­pay farm­ers’ loans were not re­mit­ted to the sacco.

“Con­se­quently, the en­tire loan port­fo­lio of the sacco amount­ing to over Sh160 mil­lion de­gen­er­ated into de­fault and thus to­tal loss with very lit­tle prospect of re­cov­ery,” noted Sasra in the lat­est su­per­vi­sion re­port for the sacco sec­tor. The author­ity warned that other de­posit-tak­ing sac­cos op­er­at­ing in the su­gar­cane grow­ing belt and whose mem­ber­ship is drawn from the farm­ers and as­so­ci­ated sugar fac­to­ries are likely to face sim­i­lar dif­fi­cul­ties in the short to long term. Sasra said that Ni­tunze’s woes put into ques­tion the wis­dom

Sasra said that Ni­tunze’s woes put into ques­tion the wis­dom of some sac­cos op­er­at­ing in vul­ner­a­ble sec­tors

of some sac­cos op­er­at­ing in vul­ner­a­ble eco­nomic sec­tors yet con­tin­u­ing to re­tain re­stric­tive mem­ber­ship el­i­gi­bil­ity criteria. “This calls for ur­gent di­ver­si­fi­ca­tion of busi­ness op­er­a­tions, prod­ucts and mem­ber catch­ment area base for such sac­cos.”

WARN­ING Sacco So­ci­eties Reg­u­la­tory Author­ity CEO John Mwaka.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.