Opportunities why Sacco’s should further be digitized

Though many SACCOs have initiated work to digitize elements of their operations, most frontend aspects are still largely manual. SACCOs primarily interact with members manually and in-person.

Past research has found that many had started some initial efforts to digitize other areas of operations but at a slow pace. For example, Sacco times can reveal that SACCOs had generally made more progress digitizing back-end operations like processing loan applications, but that interactions with members were largely manual. 

However, the COVID-19 pandemic has driven a “race to the bottom” of digitization, since SACCOs that are able to service clients remotely will be the most resilient through the pandemic and thereafter. In particular, SACCOs are now urgently looking for solutions in three areas: loan applications, communications with members and customer intelligence. 

However, this has been in the past been hindered by the literacy level of some of the Sacco members who sought anonymity that majority of the technological aspects are hard to cope with and are not applicable at the local levels for mostly Mama Mboga and among other areas.

Loan applications are an area of opportunity for further digitization, as one IT manager noted, “To apply for loans, members have to come into the office to fill out physical forms – a challenge during COVID.” Members must first come into the office to apply for a loan. The loan is then assessed by a credit officer, and the guarantor listed on the form is verified and notified through a phone call. Even among those SACCOs that have automated some aspect of loan approval automation, the process of providing documents or identifying guarantors is completely paper-based. 

To keep business moving, SACCOs are asking their members to fill out loan application forms, scan them, and send them to loan officers, or to send paper copies via motorcycle messengers. This process is cumbersome and error-prone, so SACCOs urgently need a digital solution.

The SACCOs we spoke to said they would like to digitize the loan application process so that members can apply via their phones or computers. They also want to integrate collateral management, additional credit scoring parameters/sources and notifications to alert members about the progress of their loan applications. 

Another area of opportunity is communications with members. SACCOs previously relied on physical meetings with members at either branches or head offices to communicate information about products and policies. Without the ability to meet, SACCOs are now using bulk SMS to communicate. Members then have to call if they have a problem. According to a SACCO CEO, “There is only one-way communication – the members get our messages. But, if a member has a query, they call through the customer care number without a guarantee it will be picked up due to high call volumes.” 

Finally, SACCOs highlighted customer intelligence as an area of opportunity as they want to track potential leads, member queries and analytics on dormant versus active accounts. Most SACCOs cannot easily see a customer’s information in one place, nor can they aggregate customer analytics. Much of this information is currently managed across various systems and record-keeping processes, so SACCOs cannot get a clear sense of how everything fits together. 

Digital illiteracy among members, especially for SACCOs with older members 

Even when SACCOs make the switch to digital, they often find that members are not leveraging the digital channels available to them and continue to visit offices for inquiries/transactions. This is especially true for SACCOs with older members who are uncomfortable using these digital channels. According to one SACCO’s CTO, “Most of our members aren’t using mobile banking; they use the banks at the main office.”  

However, with COVID-19 restrictions, members need to access their accounts remotely, SACCOs are more focused than ever on finding a member-facing digital solution that has a broad range of functionality and works. 

To help SACCO members make the transition, Kwara has developed a staggered pathway for adopting the system, in the form of a new offering called Pronto. Kwara’s Pronto, with its sleek, simple interface and intuitive features, has resulted in positive member feedback. Kwara is constantly iterating on the offering to make it more accessible to less digitally-literate members.

Economic impact of covid-19 pandemic to Sacco’s

As the world grapples with the Covid-19 pandemic, much has been happening economically with efforts to cushion the society from the adverse effects caused by the pandemic.Kenya reported its first coronavirus case on March 13, 2020 –a move that prompted President Uhuru Kenyatta to direct on measures to help curb the spread, including the nationwide curfew that was imposed on March 25.The pandemic has caused a ripple of effects to the country’s economy, especially the financial service sector –and SACCOs have not been left behind. Societies business has been adversely affected losing especially on deposit mobilization.

The rate at which we disburse loans has gone down due to limited uptake by members and the cash crunch exhibited in the SACCOs. Organizations have laid off employee, a move that has affected business thus affecting the inflow of cash. Members have also been skeptical in taking loans due to the uncertainty in the future as a result of the COVID-19 pandemic.Going forward as societies, we have adopted various technological strategies including virtual meetings and digital channel communication, to ensure we have sustained our services to members.

The first encounter whenever there is a pandemic are the effects and the impact which follows later. Some of these effects so far noted are both social and economic.Social effects. The pandemic has posed a number of effects to the society which includes;a) People working from home.b) Virtual other than boardroom meetings.c) Imposed curfew where movement has been restricted.d) Lack of gatherings for people to share ideas.e) Loss of jobsEconomic effects

The total economic effects will be felt much later depending on how the pandemic is handled and the time taken to control it. Meanwhile, the immediate economic effects caused when the virus struck the country includes;a) Loss of business.

Low deposit mobilization. Poor loan performance The Government, in its effort to cushion citizens against the socio-economic impact caused by the pandemic, has been able to offer tax relief to both individuals and companies –based on the following tax brackets.a) Corporation tax reduced from 30% to 25%b) PAYE reduced from 30% to 25% and the tax bracket on payee having been improved from the minimum taxable amount from Kshs. 15,000 to Kshs. 24,000.c)

Value added tax (VAT) having been reduced from 16% to 14%d) The injection of the stimulus economic funds into the economy specially to settle the pending bills of services rendered to both the County and National Government. The move comes as a relief to societies, as it will go a long with strengthening our SACCOs as well as increasing both the purchasing and the borrowing power. Members of the SACCOs will greatly benefit on the corporation tax since what would have gone to KRA can circulate within the SACCOs to generate more business. Sacco’s should concoct for the hard times ahead us the ripple of effects from the pandemic appear to be endemic for the next two years. As a society, we urge the SACCO members to follow all Government directives and simple hygiene measures to help curb the novel coronavirus, which include; a) Wash your hands with soap) Sanitize your hands) Observe social distanced) Wear mask. GOD FOR US A

Sacco regulator tightens rules on member deposits

avings and credit co-operative societies (Saccos) must comply with new regulations by June 30.

The Sacco Societies Regulatory Authority (Sasra) has ruled out an extension for compliance to the Sacco Societies (Non-Deposit-Taking Business) Regulations, 2020, saying the societies had over a year to prepare for the rules.

It warned the public against dealing with any Sacco that will not have complied by the set date.

“Any person, including members of the public and public entities who undertake such specified non-deposit-taking business transactions or other businesses with an unauthorised person, entity, or Sacco society shall be doing so at his or her risk and peril,” said Sasra Acting chief executive Peter Njuguna in a statement yesterday.

The regulations not only affect Saccos with physical offices but also those that conduct their businesses virtually.


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This includes organisations that mobilise members through subscriptions and those that take share capital from persons who are not resident in Kenya.

The main aim of the regulations is to protect members’ savings following cases of Saccos going under with millions of shillings and leaving members penniless.

Sasra said many Kenyans have lost their money to pyramid scheme-like entities operating virtually and purporting to be Saccos by hoodwinking the public to save with them with promises of good returns, only to disappear

“The new regulations will thus rein in such dubious entities,” Njuguna said.

These regulations target as well Non-withdrawable Deposit Saccos, where members get their deposits back after leaving the Sacco but can use them as collateral for loans during the period of membership.