According to Interior Cabinet Secretary Fred Matiang’i, saccos hold Sh230 billion in deposits, and have to be regulated properly so as to safeguard this money.
He said managers of cooperative societies who misuse members’ deposits will face the law.
Dr Matiang’i’s warning comes on the back of recent claims of misappropriation of members’ savings at the troubled Ekeza Sacco.
The Interior CS, who spoke on Thursday during a delegates meeting for Police Sacco, said the societies are prone to corruption just like government institutions are.
“The President is serious about the fight against corruption. Whereas graft is deeply entrenched in State agencies, saccos are not immune to it,” Matiang’i said.
Matiang’i lauded the Police Sacco for helping its members get loans to purchase houses, an effort he said was a big boost for President Uhuru Kenyatta’s affordable housing plan.
According to the CS, Police Sacco has disbursed Sh24 billion so far as loans to its members. Most of it has gone into purchasing land and houses.
During the meeting, the Sacco approved a Sh220 million dividend to its members.
Matiang’i urged members to plough back half of that money into the sacco so that it can be invested. He also told Police Sacco managers to keep offering cheap credit to members.
He noted the 15 per cent interest rate charged on some loans advanced by the sacco as too high, though the interest is charged on a reducing balance. He said such rates are not affordable to a majority of members.
“I wish to challenge the leadership and management of this sacco to revisit the core principles and values for which it was founded upon,” said Matiang’i.
“I believe the principles stand to shield members from financial ruin that is prevalent in the open markets.”
The sacco leadership was represented by its chairman David Mategwa. Inspector General General of Police Joseph Boinnet lauded the sacco for embracing ICT in its work.
Edward Mbugua, Deputy IG of Police asked the sacco to consider the plight of young recruits who cannot afford high rates.