Kenyans are saving in, and borrowing more from, Saccos than ever before, pushing the sector’s assets past KSh1 trillion by the end of 2024, but the sector is grappling with increasing non-performing loans.

• According to the latest Financial Stability Report by the Central Bank of Kenya (CBK), deposits in the country’s 358 Saccos grew by 10.7% in 2024, while total assets expanded by 10.1%.
• Non-performing loans (NPLs) jumped to 6.3% of gross loans, reversing improvements seen in 2023. With unemployment and high living costs eroding repayment capacity, more members are falling behind on their obligations.
• The sector’s vulnerabilities were laid bare by the woes of the Kenya Union of Savings and Credit Cooperatives (Kusco), a national secondary cooperative meant to support primary Saccos.

“The quality of assets deteriorated with NPLs to Gross loans increasing to 6.3 percent. Provision for NPLs increased by 26.6 percent compared to the growth rate of NPLs which declined by 19.7 percent,” notes CBK.

The value of the sector’s combined assets has tripled in the last nine years, from KSh 392.8bn in 2016 to KSh, 1.08 trillion at the end of December 2024. The sector’s gross income increasing from KSh. 80.2bn in 2019 to KSh 159.6bn in 2024. Its core capital has also almost doubled to stand at KSh 188.7bn in 2024.

The KUSCCO Debacle

The KUSCCO Central Finance Facility (CFF) began encountering significant challenges precipitated by panic withdrawals between October 2023 and January 2024, affecting its operations and ability to reimburse deposits to members. The Government ordered for a probe into allegations that it was running several businesses and offering products without the requisite licensing and approvals, piling onto the growing woes at the organisation.

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According to the CBK report, regulated Saccos were unable to access deposits and shares after Kusco ran into trouble. This episode has raised governance questions and dented confidence in inter-Sacco arrangements.

“The sector has grown too big to be casual about governance. Failures at one institution can quickly ripple across the entire movement,” the CBK cautions, underscoring the need for stronger oversight and accountability.

To address risks, regulators are banking on the operationalisation of Sacco Central, a shared liquidity facility and technology platform. The CBK says the new body will “provide liquidity facility, shared technology platform, and payment solutions… expected to enhance stability and growth of Saccos”