Mumias Sugar Company. [Mumo Munuve, Standard] As the prevailing market conditions sucked the sweetness out of the cane, so was life in Saccos affiliated to Mumias Sugar Company in Kakamega County, leaving members with the bitter taste of bagasse in their mouths.
By 2019, Sukari Sacco Society Ltd was one of the three whose licenses were not renewed by Sacco Society Regulatory Authority (Sasra). Consequently, the public was made aware not to transact any deposit taking business with them.
Sukari Sacco Society does not feature in the 2021 list of licensed Saccos in the country.
It is the same fate that befell Nitunze Sacco Society Ltd, formerly known as Mumias Outgrowers Sacco Society, which the regulator, in its supervision report for 2017, categorised it as one of the worst hit by the effects of the sugar industries woes. READ MORE
“This Sacco Society failed to meet its financial obligations largely due to the fact that nearly all its members were sugarcane farmers, many of whom obtained loans from the Sacco on the security and collateral of expected proceeds from the sugarcane farming, and deductions from the associated sugar processing factory,” says the regulator in the report The Sacco Supervision Report, 2017.
And when farmers were not paid their proceeds, they abandoned the Sacco, which was in addition to the failure to remit deductions by farmers to the society.
Saccos attached to industries happen to have a parasitic-cum-symbiotic relationship with the relevant companies, which can sometimes be likened to that of Siamese twins.
“It is difficult to make it (Sacco) independent if it is institutionally or factory-based because their common bond or interest to them is that factory where they generate income,” says George Ototo, Managing Director at the Kenya Union of Savings and Credit Co-operatives Ltd.
“This is because Saccos generally thrive where there is an income element and people can save their income in order to access credit.”
Mr Ototo references the cases of Nitunze Sacco and Sukari Sacco, which collapsed alongside Mumias Sugar Company. He says Saccos can opt for common bond to increase their lifeline and reduce dependence on members’ contribution through salaries.
Regular and easy “Salaries are regular and easy to determine, unlike these other activities like businesses whose incomes are erratic so it is the constant cash flow from employees that sustains the Sacco and gives it the bedrock for borrowing,” he said.Safaricom Sacco, which started in 2001, is another Saccos […]