Covid-19 is changing the way Sacco members borrow and save
The coronavirus pandemic has changed the patterns of credit consumption in the country among members of Cooperative Savings and Credit Societies (Saccos).
The Sacco sector is among those who appear to have defied the hard impact of the pandemic on the economy, with members’ savings increasing.
Borrowers were also reluctant to take long-term loans and instead opted for short-term loans, with the majority abandoning plans to undertake huge capital-intensive development projects. “There was an interesting element of borrowing. We have noted instances where, oddly enough, some members were borrowing and upon the allocation of the money by their Saccos, they did not withdraw the money from Sacco’s front offices. It could have been something to act as a buffer … maybe a kind of precautionary loan, ”said Kenya Union of Savings and Credit Cooperatives (Kuscco) general manager George Ototo (photo ).
“Many members did not extend long-term credit. Instead, they opted for short-term loans. With the Covid-19 situation, it is difficult to predict the future … we do not know exactly what will happen. The result has been that the loan portfolio has grown, but the available liquidity is either constant or in some cases increased. “
Saccos painted a picture of resilience last year, in terms of savings mobilization, according to data from the regular body – the Sacco Societies Authority (Sasra).
Mr. Ototo noted that many Saccos have been able to expand the use of technology, which has allowed many to continue serving their members, almost without interruption. “Saccos has managed to survive through the use of technology. As things got worse, they stepped up the use of technology and increasingly contacted members through mobile money platforms, ”he said, adding that the technology was also used to convene annual general meetings and other stakeholder meetings.
“At the industry level, Kuscco worked with the Ministry (of Cooperatives) to set up a Covid-19 response committee that worked with the Saccos.”
In the period up to December of last year, Sasra-regulated Saccos reported a 12% growth in deposits to 627 billion shillings, up from 556 billion shillings in 2019.
The industry was helped in part by the relief measures to write off businesses and individuals last March.