The Accountant-May-June 2017

Business Practice and Development
GUARANTORSHIP
NIGHTMARE FOR
SACCO MEMBERS
As to which method to deal with
defaulters is best the jury is still out
CPA Mutuku Frederick Ukongo, ukongofrederick@yahoo.com
The cooperative movement in
Kenya has performed superbly.
Its contribution to the economy
cannot be gainsaid. The
SACCO subsector the fastest
growing in the cooperative movement
has close to over 250 billion in savings.
This amount is huge; with the lion’s share
of this amount achieved through great
effort and sacrifice by the contributors.
Mostly the contributors are the middle
class and other poorly paid groups in the
economy. In some SACCOs it takes up to
six months to contribute continuously to
be able to qualify to access credit facilities.
This is no mean feat, considering that
some members do not earn as much in
terms of monthly income (which in most
cases is employment salary). Advocates
for cultivating a savings culture encourage
savers to try as much as possible to have
the amount deducted from source. This
often means employers are tasked with
the deduction and
remission of the
said amount
to the relevant
third parties. This
system (check off ) works very well for the
employees especially when the employers
live true to their promise. i.e. remitting
the deducted amounts to the SACCOs or
other relevant bodies.
The principles of cooperative
movement
From the foregoing the huge savings that
result must be managed prudently for
ultimate benefit of the savers. Analysis
has been done to show how successful the
sector is. Many a time the analysis fails to
go a step further. Obviously it is tempting
to embrace success at face value. It is human
nature to assume the many challenges
and problems that bedevil the sector.
It is imperative to challenge the status
quo. May be the success rate would have
been much better if one dared challenge
the state of complacency. It is common
knowledge that, SACCOs operate
on principles of cooperation,
voluntary and open membership,
democratic member control, member
economic participation, autonomy and
independence, education, training etc. it’s
from these principles that the governance
of the cooperative movement is derived.
Some of the challenges that bedevil the
SACCO subsector also originate from
the same principles; we may say the
weaknesses inherent in the principles.
Guarantors’ Challenge
One major challenge that affects the
performance of SACCOs is the issue of
guarantors. From the principles it is clear
that SACCOs operate for members by
members. When a member is in need of a
8 MAY - JUNE 2017