Economy
Farmer saccos top loan defaults on drought hit
Monday September 11 2023
CEO of the SACCO Societies Regulatory Authority (SASRA) Peter Njuguna speaks during the SACCO Central(Shared Services) annual delegates’ meeting on April 15, 2023, at Sarova Stanley. PHOTO | WILFRED NYANGARESI | NMG
Some 49 agriculture-based saccos, whose members are primarily farmers, topped in loan defaults last year as a biting drought hit the earnings of contributors.
This is disclosed in the newly released annual Sacco supervision report for 2022 by the Sacco Societies Regulatory Authority (Sasra) which grouped the financial institutions into nine sub-sectors where they operate.
Read: Protect sacco savers from loss on deposits
The sub-sectors are crop production-based saccos, dairy production, county government, State corporation, teachers, general service and administration, universities, private sector, and community-based saccos.
The report shows the non-performing loans (NPL) ratio stood at 18.42 percent for deposit-taking (DT) saccos in the agriculture industry in 2022, the highest of any category, more than double that of the entire industry.
The worst affected agriculture-based saccos were those in crop production where the NPL ratio stood at 19.4 percent and 12.56 percent for those whose members are primarily involved in dairy production.
This is a sharp rise from 2021 where these saccos had an NPL ratio of 14.83 percent with those in crop farming at 15.72 percent and those in dairy farming at just 7.32 percent.
General services-based DT saccos had the lowest NPL ratio of 4.95 percent followed by private sector-based DT saccos which had an NPL ratio of 6.36 percent.
Others include universities-based DT saccos (7.97 percent), State corporation-based (11.07 percent), county government-based (8.35 percent), teacher-based (10.68 percent and community-based (14.18 percent).
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The 49 agriculture-based saccos have the largest membership in the entire sector totaling 2.74 million individuals, which is 42.6 percent of the entire membership of regulated saccos.
It is an increase from the 2.59 million members in 2021.
