Number of Saccos drops in latest BoT registration

Dar es Salaam. The number of Savings and Credit Cooperative Societies (Saccos) dropped by 638 in the third quarter of last year. This was after they failed to meet requirements of the microfinance law to register with the central Bank of Tanzania (BoT).

According to a new report by BoT, the number of Saccos dropped to 2,541 in the quarter to September 2021 compared with 3,129 during the same period in 2020.

This is according to the Bank of Tanzania (BoT) Consolidated Zonal Economic Performance report for the quarter ending September 2021.

“This was largely associated with the ongoing licensing exercise of registering Saccos in line with Microfinance Act 2018, under which some of the Saccos were not qualified as per capital and other licensing requirements,” the central bank stated.

According to the report, the membership number of Saccos, share value and loans issued decreased while deposit and savings increased relative to the similar period of 2020.

Number of members dropped from 596,974 in 2020 to 520,819 while outstanding loans increased from Sh422.7 billion to Sh436.4 billion.

During the same period the share value stood at Sh64.7 billion compared to Sh61.8 billion while in the quarter to September 2020, loans issued stood at Sh897.3 billion compared to Sh772.2 billion.

Savings stood at Sh191.5 billion during the month of September 2020 compared to Sh194.1 billion in September 2021 while deposits stood at Sh42.5 billion compared to Sh46.5 billion during the same period.

The Microfinance (Savings and Credit Cooperative Societies) regulations 2019, some did not qualify due to either capital or licensing requirement where Saccos with Category A license shall commence operations with and maintain at all times a minimum core capital of Sh10 million while Saccos with Category B license shall commence operations with and maintain at all times a minimum core capital of Sh200 million.

According to the regulations, every Saccos is required to maintain core capital of not less than 8 percent of total assets; institutional capital of not less than six percent of total assets; and net institutional capital of not less than six percent of total assets.

Where a Saccos fails to meet minimum capital requirements as provided under the regulations, shall, within sixty days of the shortfall, submit to the Bank or Delegated Authority a capital restoration plan that shows the action to be taken by management to increase the capital back to the minimum requirement; time frame for restoration of capital to the minimum requirement; the level of capital to be achieved at the end of each quarter; and any other information as the Bank or Delegated Authority may require.

Where Saccos fails to meet its minimum capital requirement and has failed to submit or implement a capital restoration plan, the Bank or Delegated Authority may take such administrative measures as may be appropriate.

Every Saccos shall have a board, which is composed of at least five members elected in accordance with the provisions of the cooperative Societies Act where Saccos with Category B license shall have at least two members with knowledge of either finance, business management, accounting, microfinance or economics.

The board in addition to the duties provided under the Cooperative Societies Act ensure the Saccos operates effectively and complies with the provisions of the Act, these regulations and any other relevant legislation; establish appropriate policies for lending, liquidity and asset liability management, human resources, investments, savings, finance, information preservation, and other policies as determined by the board; make proposals for external borrowings; ensure the accounts of the Saccos are prepared and audited according to the Act.