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Top saccos splash Sh47bn dividends amid Kuscco hit
The 40 saccos are among the 354 under the supervision of Sacco Societies Regulatory Authority (Sasra) and collectively raised their dividends 12.06 percent to Sh55.06 billion.
Top savings and credit co-operative societies (saccos) raised their dividend payouts to Sh46.99 billion, shrugging off advisories urging cuts amid fear of losses linked to the multi-billion-shilling fraud at Kenya Union of Savings and Credit Co-operatives Ltd (Kuscco).
Disclosures from the top 40 saccos by deposits show a 13.7 percent increase in dividends from the Sh41.34 billion surplus earnings that the co-operatives offered their members last year.
The multi-billion shilling payouts come amid an advisory from the State for over 247 saccos to limit dividend payouts and write-offs of losses linked to the fraud at Kuscco.
Wrongdoings at Kuscco include the cooking of books, large-scale theft by executives, bribery, unexplained bank withdrawals and conflict of interest through issuance of contracts to firms owned by top managers and masking the schemes through manipulation of financial statements to report non-existent profits.
At the end, Sh13.3 billion has been lost, the umbrella body of saccos is insolvent to the tune of Sh12.5 billion and Sh24.8 billion it received from 247 saccos as deposits are at risk.
Some top saccos have set aside partial funds or full provisions to cover the expected loss of billions of shillings worth of deposits and shares at Kuscco.
Saccos such as Qona, formerly Safaricom Sacco, raised dividends while in breach of a global accounting rule that demands the cooperatives book the Kuscco losses from day one and in full.
The Sacco paid Sh902.6 million, up from Sh794.4 million, despite spreading provisions for its Sh134.7 million potential Kuscco losses over the next four years.
This violates the IFRS 9 accounting rules, which require lenders such as saccos to book expected losses on assets in one go.
Saccos that have made full provisions include Balozi (Sh437.55 million), Mhasibu (Sh408 million), Kimisitu (Sh353.95 million), Kenpipe (Sh149.18 million), Stima (Sh108 million) and Sheria (Sh146.8 million).
But this did not stop Stima, Mhasibu and Kimisitu from raising their dividends to Sh5.09 billion, Sh788.5 million and Sh830.1 million respectively.
“The increased payouts is a demonstration of resilience in the cooperatives sector despite many Saccos having increased their provisions for known and probable loan losses as required by the law and in line with prudent accounting practices,” said Patrick Kilemi, the Principal Secretary (PS) in the State Department for Cooperatives, in a phone interview.
Out of the top 40 saccos, only two—Apstar and Waumini—reduced payouts.
Mwalimu National Sacco had the highest dividend of Sh5.11 billion followed by Stima Sacco at Sh5.07 billion, with the country’s top five saccos splashing Sh19.06 billion or 40.5 percent of the payouts made by the 40 saccos.
Under the sacco model, members earn interest on their deposits and dividends on their share capital whenever they post a surplus. The payouts are prorated based on deposits and share capital held by each member.
Kenya National Police Sacco (Sh4.07 billion), Tower Sacco (Sh2.43 billion) and Harambee Sacco (Sh2.38 billion) completed the list of saccos with distribution above Sh2 billion. Seven others -- Imarisha, Hazina, Mentor, Gusii Mwalimu, Bandari, Invest & Grow and Trans Nation -- paid between Sh1.05 billion and Sh1.97 billion.
Police Sacco, which paid a 17 percent return on share capital and 11 percent on deposits, raised provision to Sh510.36 million from Sh309.9 million but did not specify if it was linked to Kuscco.
The filings show the 40 saccos cumulatively held Sh453.06 billion as deposits on which they paid members interest of Sh41.05 billion or a 13.1 percent growth from Sh36.3 billion a year earlier.
The payout on share capital rose by 18 percent to Sh5.94 billion from Sh5.04 billion.
The 40 saccos are among the 354 under the supervision of Sacco Societies Regulatory Authority (Sasra) and collectively raised their dividends 12.06 percent to Sh55.06 billion.
Saccos’ average return on deposits and share capital have been rising since 2021, maintaining their position as one of the preferred investment homes for millions of Kenyans.
For instance, Sasra data shows interest rates on members’ deposits averaged 7.45 percent in 2023 compared with 5.82 percent in 2020 while the average payout on share capital hit 10.92 percent from 8.22 percent.
In the year to June 2024, savings in co-operative societies—a combination of those under Sasra and Commissioner of Cooperatives—grew by Sh79 billion to Sh1.126 trillion from Sh1.047 trillion the previous year.
But irregularities at Kuscco have left a blot in the sector.
The State has cast doubts about whether saccos will recover their investments in Kuscco, underlining the extent of fraudulent activities in the umbrella body.
The rot has left Kuscco with assets of Sh5.2 billion against liabilities of Sh17.7 billion liabilities, sinking it into Sh12.5 billion insolvency.
A PwC audit unearthed the cooking of financial books to the tune of Sh9.3 billion following understatement of costs like commissions and interest expenses and overstating incomes—a scheme which saw Kuscco book phantom profits.
The audit shows that between 2018 and 2023, Sh206 million may have been stolen through withdrawals from Kuscco Sacco’s savings bank account in the name of replenishing cash at Kuscco Fosa branches.
Records unearthed by PwC indicated false entries of commissions of up to 3.0 percent. As a result, the executives withdrew Sh1.6 billion but paid out Sh1.1 billion.
