SACCOs are expected to be major players through which Kenyans will access the Hustler fund.
According to the new Cooperatives and MSME development Cabinet Secretary Simon Chelugui, Saccos play a critical role in saving mobilization and intermediation in accelerating financial inclusion for the millions of Kenyans who would have been excluded from the mainstream financial sector.
Speaking during a consultative meeting with the leadership of cooperatives under the Cooperatives Alliance of Kenya (CAK), the CS said that cooperatives are the heartbeat of the current administration.
“The most important emergent development and key economic policy intervention of the new administration is the Financial Inclusion Fund which is Hustler Fund.
He noted that President William Ruto’s intention is to enable Kenyans at the bottom of the pyramid to access affordable and timely credit facilities since most of them had been previously locked out of the credit facility.
“We want to boost a saving culture while creating a momentum for sustainable development and there are our products that will be supported by the fund namely the Personal loan, Micro Loans, SME loans and Start up loans, “he said.
The CS confirmed that the personal loan product has been finalised as well as the regulations which are now undergoing public participation and that the first rollout of this flagship programme will be unveiled and launched on November 30th this year by the President.
He promised the Saccos that they will be fully involved in the Micro and SME lending adding the personal loans will see Kenyans borrow digitally ranging between Sh500 to Sh 50,000.
Chelugui said 7,000,000 people are in this category of digital borrowing and this is an expansion and increase from the previous borrowing of between Sh700, to Sh 2000 that they were accessing in other platforms.
The difference of this fund, he explained will be how we lend and that is through the credit scoring which is a critical tool to assess the suitability and eligibility of access to the fund, Shifting from collateral way of lending to now credit scoring.
“Once we are done with the personal loans, we will now move to the Micro loans and this is where the cooperatives and Saccos will be engaging with the government,” he explained.
“We will have service level agreement with Saccos and banks who qualify for this facility to ensure that delivery is done so that we achieve the intended call but through intermediary criteria being developed. We are on a mission to ensure we impact at the bottom of the pyramid. It will be the biggest bank. We are moving towards virtual and digital banking and this will unlock open opportunities to those people who have been locked out and the un-bankable. Am appealing to Saccos to give us some time to roll out the first product and we are developing the next one which is Micro loan and launch it by January. Meanwhile let us engage,” he said.
Chelugui promised that other policy initiatives that the ministry will be implementing in the coming months is the Central Liquidity Facility (CLF) and also shared services platform and Deposit Guarantee Fund (DGF) as well as ongoing coffee sub sector.
“We will be increasing production of coffee from the current 40 metric tonnes to 140 metric tonnes per annum. The dairy sub sector by increasing production from 1.5 million to 3 million litres per day,” he promised.
He urged the cooperatives leader to understand the mandate of the new Ministry and align where possible activities of the sector to the government’s policy guidelines and also to take advantage of the new investment opportunities in areas such as affordable housing.
At the same time, CS Chelugui put employers who delay in remitting Sacco members’ contributions on notice.
“These Saccos have about Sh 2.3 billion owed to them by employers, these are monies not remitted for various reasons and yet they were deducted, I want the summary from SASRA on the list and give us one year to see how far we can even if it means we go to the source we will be there,” he said.
The CS promised to work with the Central Bank, county government sand ministry of Finance to ensure that Saccos do not collapse because of non-remittance of their savings. “I am right behind you Commissioner and any action that you want to take, I will be behind you even if it means freezing accounts”, the CS firmly said.
Cooperative Alliance of Kenya Chairman , Mccloud Malonza highlighted some of the key areas that as a movement will require priority and support of the government is prioritization of the enactment for the Cooperatives societies bill into an Act by parliament.
Others are support in the agriculture sector and also re organization of the cooperative movement into federations to support growth in production, value addition and diversification of economic activities.
“We want to position cooperatives to play a key role in promoting environmental sustainability through adoption of climate friendly production initiatives, financing and adoption of green energy,” he said.
The Cooperative movement had been affected hugely during the COVID 19 pandemic but despite the turbulence, the sector remained resilient and by the end of 2021 there were over 26,000 registered cooperatives with a membership of over 14 million.
The sector had accumulated total assets of more than Sh1.5 trillion, accumulated savings of 1 trillion and issued loans and advances in excess of Sh980 billion. Cooperatives contribute 30 percent of Kenyans annual national savings.
Caption
CS cooperative Simon chelugui and CAK Chairman Mccloud Malonza during a cooperative leaders meeting
