Kenya’s Co-operative Commissioner, David Obonyo, has challenged Saccos to balance ambitious growth targets with strong capital buffers and robust cyber security systems, cautioning that rapid expansion without prudential discipline could put members’ funds at risk.
Speaking during Hazina Sacco’s 42nd Annual Delegates Meeting (ADM), Obonyo described the forum as “not merely another general meeting, but an opportunity to review your past performance and set your future targets on how best to steer your Sacco forward.” He urged delegates to treat the ADM as “a declaration of renewed vision,” noting that strategic planning and disciplined execution are key to achieving growth targets.
Hazina Sacco has set a bold strategic plan to reach Sh25 billion in assets by 2025, a goal Obonyo acknowledged as ambitious but achievable. “You only need to focus on your target, lay good strategies, and ultimately, I believe you will achieve it. It’s attainable,” he said.
Strong Growth, But Prudence Needed
The Sacco recorded impressive growth in the past financial year:
- Total assets: Sh18.7 billion, up from Sh12.8 billion
- Loan book: Sh12.9 billion, up from Sh11.5 billion
- Total deposits: Sh13.9 billion, up from Sh12.4 billion
Obonyo described this performance as commendable, reflecting over 10 per cent growth and the Sacco’s ability to compete in a dynamic financial sector. However, he raised concern over a gradual decline in capital adequacy ratios over the past three years, even though Hazina Sacco remains above the statutory thresholds set by SASRA.
- Core capital to total assets: 16% (minimum 10%)
- Core capital to total deposits: 21% (minimum 8%)
- Institutional capital to total assets: 11% (minimum 8%)
“But when you look over the years, these ratios are declining,” Obonyo observed. “This is partly because Saccos are keen on returns to deposits but are not retaining enough surpluses to strengthen capital.”
He cautioned that while competitive returns are attractive, over-distribution of surpluses can erode institutional stability. He suggested returns slightly above market rates, around eight per cent, as a sustainable benchmark that remains competitive without compromising the Sacco’s financial base.
Cyber Threats on the Rise
Obonyo also issued a stern warning on cybercrime, highlighting that Saccos are increasingly targeted by attackers. “If you have not been hit, thank God. But as you thank God, prepare on how you are going to protect yourselves,” he said.
He recounted instances where Saccos were unable to access their systems, paralyzing transactions and triggering panic among members and management. “If your Sacco is attacked and told to pay a ransom, it could run into millions and eventually affect dividends,” he warned.
To mitigate such risks, Obonyo urged the adoption of robust ICT systems capable of high performance, security, and resilience under all challenges, particularly as Kenya’s financial sector accelerates digital transformation.
Regulatory Updates and Reforms
Delegates were also briefed on the long-awaited Cooperative Bill, now headed for mediation between the National Assembly and Senate after differences arose between the two Houses. “Once again, I believe this will be our final year to talk about the Bill,” he said, noting that a mediation team is expected to harmonise positions in April.
The reforms aim to:
- Strengthen Sacco supervision and risk management
- Enhance protection of members’ funds
- Promote digital transformation and innovation
- Entrench good governance and ethical leadership
- Boost youth and women participation
Additionally, a Cabinet-appointed expert committee has reviewed the Sacco Act and submitted recommendations to the Head of State, further underpinning the government’s commitment to a modern, resilient cooperative sector.
A Pillar of Financial Inclusion
Kenya’s Saccos remain a critical pillar of financial inclusion, mobilising billions in savings and providing affordable credit to millions of members, including SMEs and rural communities. Obonyo emphasised that sustainable growth must be anchored on governance, prudential risk management, and technological resilience.
“For Hazina Sacco and its peers, the message is clear: growth must be matched with governance, prudent risk management, and technological resilience,” he said. “If you want to get more returns next year, they must be grounded in strong governance, careful risk management, and robust technology infrastructure.”
With rising competition from banks, fintechs, and digital lenders, Obonyo’s message to Saccos was unmistakable: ambitious growth is commendable, but only a disciplined, secure, and well-governed Sacco can deliver sustainable value to its members.
