Effective from January 1, 2024, this levy, termed the Annual Sacco Societies Levy, sets out a trajectory of incremental rates over the next four years.
Starting at 0.10 percent of the non-withdrawable deposits in 2024, the levy climbs to 0.15 percent by 2027.
The tax is calculated based on the total non-withdrawable deposits held by the Sacco society, as reflected in their audited financial statements.
Sasra’s leadership, including Chairman Jack Ranguma and CEO Peter Njuguna, clarified that despite the escalating levy, the maximum payable amount would cap at six million shillings.
Implications for Sacco SaversThe impact of this levy on individual savers is notable. As the tax rate is contingent on the total non-withdrawable deposits, it directly affects the financial standing of those with savings in Saccos.
Fresh data from the State Department of Co-operatives showcases the sector’s substantial growth, with non-withdrawable deposit-taking savings reaching Sh97.86 billion by June 2023.
This growth trajectory indicates Sasra’s aim to generate an additional Sh100 million annually through the levy.Saccos’ Contribution to the Economy
The Kenyan cooperative movement, especially Saccos, has significantly bolstered the country’s economy. Member deposits in Saccos soared past the Sh1 trillion mark for the first time in June 2023, a testament to the improved member confidence and the adoption of digital channels in financial services.
Savings in deposit-taking Saccos exceeded targets, displaying a robust growth trend in the sector. Notably, the higher interest rates offered by regulated Saccos compared to commercial banks have been a key attraction for savers, fostering the dual benefit of interest earnings and collateral for loans.
The imposition of this tax underscores the government’s intention to create financial independence for Sasra, reducing dependence on the Exchequer. However, its impact on individual savers within the Sacco sector poses challenges, potentially altering the financial landscape for those who rely on Saccos for savings and loans.
The growth trajectory of Saccos highlights their pivotal role in the Kenyan economy, emphasizing the need for a delicate balance between revenue generation and ensuring the financial stability of Sacco savers.
