Bad loans hit Sh60b as Sacco regulator blames non-remittance of dues

About Sh8 in every Sh10 held by employers as unremitted Sacco dues is related to loan repayments, a report by the industry regulator shows.

In the latest industry numbers, of the Sh3.9 billion held as non-remitted funds, Sh3.04 billion is in loan repayments.

This is as Sh0.88 billion is in saving deductions made through back office service activity (BOSA).

The Sacco Societies Regulatory Authority (Sasra) now links these growing non-remitted funds to the sector’s non-performing loans (NPLs).

In the report, unremitted funds related to loan payments have almost doubled from Sh1.68 billion in 2023 to Sh3.04 billion in 2025.

In total, non-remitted funds (loan repayments and BOSA deductions) have grown from Sh2.6 billion in 2023 to Sh3.9 in 2025.

The Sacco Supervision Annual Report 2025 shows these non-remitted funds increased to Sh3.04 billion in 2025, representing a proportion of 77.55 per cent of the total non-remitted funds compared to Sh2.60 billion representing 74.50 per cent of the total non-remitted funds which was owed in 2024.

“The implication of the failure by the various employer-institutions to remit regulated Saccos deductions meant for repayment of outstanding loans means that the loans and credit facilities issued by such affected regulated Saccos are either automatically in default or are substantially impaired,” the report says.

“This is one of the main contributing factors to the aggregate non-performing loans of the regulated Saccos”.

The report shows NPLs closed the 2025 period at Sh60.45 billion, which was a slowed growth compared to Sh70.87 billion in 2024. The 2024 figure was, however, a growth from Sh64.06 billion in 2023.

From the report, non-remitted funds due to BOSA has reduced since 2023, from 35.12 per cent of the total non-remitted funds to 22.45 per cent. This is from Sh91 million in 2023 to Sh88 million in 2025.

Noting this trend, Sasra in the report questions why certain employer-institutions deduct the money but only remit a portion of the deductions to the beneficiary regulated Saccos.

“This notwithstanding, the continued failure by various employer-institutions to promptly remit the deductions made from employees’ remuneration to the beneficiary regulated 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,” the report says.

On the members' side, Sasra says, the failure to remit deducted BOSA dues have the impact of diminishing the member’s borrowing capacity since the amount qualified is pegged on those savings.

“While the failure to remit the loan repayment deductions on the other hand puts the member in conflict with their regulated Saccos over recovery of the subject loan or credit facility,” the report says.

The report shows that total non-remitted funds for deposit-taking Saccos (DT-Saccos) stood at Sh3.38 billion as at December 2025, which is 86.16 per cent of the industry’s total non-remittance.

This is as non-remitted funds by non-withdrawable deposit-taking Saccos (NWDT-Saccos) stood at Sh540 million, representing 13.48 per cent of the whole industrial.

The report explains that the DT-Saccos segment of the sector has been consistently bearing the largest proportion of the non-remittance menace.

“This was a sharp increase from the sum of Sh3.10 billion representing 88.75 per cent of the total non-remitted funds which was owed to the DT-Saccos segment in 2024,” the report says.

The NWDT-Saccos on the other hand recorded a significant increase in the non-remitted funds owed to Sh0.54 billion representing 13.84 per cent of the total non-remitted funds in 2025, from a sum of Sh0.39 billion being the  non-remitted funds owed for the period ended December 2024.

“The low amounts of the non-remitted funds owed to the NWDT-Sacco may be attributed to the fact that a majority of them still operate on closed common bonds, and drawing their membership from single employer-institutions, unlike their DT-Saccos counterparts with open-bond membership and thus exposed to dealing with multiple employer-institutions such as County Governments and Assemblies,” the report says.

According to the report, County Governments and Assemblies owed the highest amount of non-remitted funds amounting to Sh1.88 billion representing 48.09 per cent of the total non remitted funds in 2025.

This, Sasra says, was a slight increase from the amount owed by County Governments and Assemblies in 2024, which amounted to Sh1.61 billion representing 46.07 per cent of the total non-remitted funds.

Consequently, the report notes a  deterioration in the financial performance (especially loans) of regulated Saccos which draw their membership or a bulk of their membership from County Government and County Assemblies and County Government-based entities.

Sasra finds this scenario an oxymoron considering that cooperative functions is a constitutionally devolved to counties.

“It is thus expected that the County Governments and their Assemblies would be at the forefront of promoting cooperatives through prompt remittances made from employees’ deductions,” says Sasra.

Sasra insists that these remittances are usually made directly from the employees’ remunerations and therefore at any time that the employees of County Governments and Assemblies are paid their remuneration, then the deducted remittances should equally be forwarded to the beneficiary regulated Saccos without fail.

“Consequently, it is disturbing that the employees of the defaulting County Governments and Assembles get paid, but the portions of funds deducted from such remunerations are not remitted to the beneficiary Regulated Saccos, with the only plausible explanation being that the deducted funds were diverted for other purposes,” the report says.