Nelly
Member
More than 1.3 million Kenyans have stopped making monthly contributions to savings and credit cooperative societies (saccos) in the wake of job cuts that followed the Covid-19 pandemic.
Data from the regulator, the Sacco Societies Regulatory Authority (Sasra), shows that the number of savers who had stopped making contributions jumped 79.5 percent from 764,472 in 2019 to 1.372 million last year.
Sacco members who are no longer active savers now account for a quarter or 25.09 percent of the 5.4 million total membership compared to 16.95 percent reported in 2019.
The sharp fall in members making monthly savings came in a year when the economy experienced business closures as well as layoffs, pay cuts and unpaid leave, making it a struggle for members to make regular payments to the saccos.
The subdued jobs market also led to mounting loan defaults among the 175 saccos that take deposits and are regulated by Sasra.
“The sharp increase in the dormancy of members may be attributed to the general impacts of the Covid-19 pandemic on the general economy, resulting in reduced member transactions with their respective DT-Saccos,” Sasra said in its annual report for 2020.
Thousands of workers lost jobs last year after Kenya imposed Covid containment measures like travel restrictions and night curfew.
The government is yet to release employment data for the whole of last year, but about 1.72 million workers lost jobs in three months to June on the Covid-19 economic fallout.
Loss of jobs and reduced pay during the pandemic depleted incomes, forcing Kenyans to fall behind on payments of rent, utility bills and now sacco savings.
Banks have seen a surge in non-performing loans that rose to 14 percent of total loans disbursed by June while Kenya Power sunk into its first loss in 18 years, in part blaming delays in collecting outstanding bills running into billions of shillings.
The 175 saccos were hit with a surge in loan defaults, which increased from Sh25.7 billion in 2019 to Sh39.8 billion last year, reflecting a 54.8 percent rise.
The sacco regulator labels a member dormant once he or she stops making monthly contributions for six months
Data from the regulator, the Sacco Societies Regulatory Authority (Sasra), shows that the number of savers who had stopped making contributions jumped 79.5 percent from 764,472 in 2019 to 1.372 million last year.
Sacco members who are no longer active savers now account for a quarter or 25.09 percent of the 5.4 million total membership compared to 16.95 percent reported in 2019.
The sharp fall in members making monthly savings came in a year when the economy experienced business closures as well as layoffs, pay cuts and unpaid leave, making it a struggle for members to make regular payments to the saccos.
The subdued jobs market also led to mounting loan defaults among the 175 saccos that take deposits and are regulated by Sasra.
“The sharp increase in the dormancy of members may be attributed to the general impacts of the Covid-19 pandemic on the general economy, resulting in reduced member transactions with their respective DT-Saccos,” Sasra said in its annual report for 2020.
Thousands of workers lost jobs last year after Kenya imposed Covid containment measures like travel restrictions and night curfew.
The government is yet to release employment data for the whole of last year, but about 1.72 million workers lost jobs in three months to June on the Covid-19 economic fallout.
Loss of jobs and reduced pay during the pandemic depleted incomes, forcing Kenyans to fall behind on payments of rent, utility bills and now sacco savings.
Banks have seen a surge in non-performing loans that rose to 14 percent of total loans disbursed by June while Kenya Power sunk into its first loss in 18 years, in part blaming delays in collecting outstanding bills running into billions of shillings.
The 175 saccos were hit with a surge in loan defaults, which increased from Sh25.7 billion in 2019 to Sh39.8 billion last year, reflecting a 54.8 percent rise.
The sacco regulator labels a member dormant once he or she stops making monthly contributions for six months