The State is working on payroll changes that will see the National Treasury directly remit savings and loan deductions to members’ saccos as it moves to address non-remittance of deductions that has swelled to Sh3.92 billion across the industry.
Cabinet Secretary for Co-operatives and Micro, Small and Medium Enterprises Development Wycliffe Oparanya said the reforms, which were initially expected to take effect in July, would centralise payroll processing for government agencies and county governments at Treasury.
Once implemented, deductions for saccos savings and loan repayments will be sent directly to the respective institutions instead of passing through employers in a bid to protect the interests of members of the thrift institutions.
“This means deductions for saccos and other co-operatives towards savings and loan repayments will be remitted directly to the respective institutions. This is being worked on and, as soon as it is implemented, we will forget about this problem of non-remittance,” said Mr Oparanya.
He spoke during the release of the 2025 sacco supervision report, which showed the amounts owed to saccos regulated by Sacco Societies Regulatory Authority (Sasra) had risen by 12.3 percent to Sh3.92 billion at the end of last year from Sh2.49 billion a year earlier.
The number of saccos affected by the non-remittances increased from 85 to 89 over the review period. Sacco members affected by the remittance delays nearly doubled to 104,331 from 55,602 in the previous year.
County governments and assemblies accounted for 48.09 percent of the outstanding funds, followed by public universities and tertiary colleges at 18.52 percent and State corporations at 12.26 percent.
Sasra chief executive David Sandagi said in an interview that the proposed model would remove the employer as an intermediary between the employee and saccos, helping address public sector-related non-remittances.
Under the proposed approach, Mr Sandagi said, employers would receive only the amounts due for payment to employees, while sacco deductions would flow directly to the societies.
“With this approach, what flows to the entity will only be what is due to it, while what is due to sacco members will flow directly to the saccos,” he said.
The Sasra report showed that Sh3.04 billion or 77.55 percent of the outstanding funds in 2025, represented deductions for loans and other credit facilities, up from Sh2.60 billion. A further Sh879.7 million related to savings deductions.
The regulator said failure by employers to remit loan deductions has left the affected loans in default or substantially impaired, contributing to non-performing loans and putting pressure on saccos’ liquidity.
“The continued failure by various employer-institutions to promptly remit the deductions made from employees’ remuneration to the beneficiary saccos continue to seriously hamper the liquidity position of the regulated saccos, as well as their ability to meet member obligations regarding issuance of loans and credit facilities, which is their core business,” said Sasra.
Under the check-off arrangement, employers deduct loan repayments and savings contributions directly from employees’ salaries and remit the funds to their respective saccos.
Sasra notes that while the model has helped promote a savings culture through direct deductions from salaries and made it easier for saccos to recover loan repayments, the challenge of non-remittance has undermined these benefits.
