The Kenyan government is implementing payroll reforms to address the issue of non-remittance of savings and loan deductions to members' saccos, which has swelled to Sh3.92 billion across the industry. Cabinet Secretary for Co-operatives and Micro, Small and Medium Enterprises Development Wycliffe Oparanya stated that the reforms will centralize payroll processing for government agencies and county governments at the National Treasury. This move aims to protect the interests of members of thrift institutions.
The proposed reforms, initially expected to take effect in July, will enable the Treasury to directly remit deductions for saccos savings and loan repayments to the respective institutions, eliminating the need for employers to act as intermediaries. According to Oparanya, this change will ensure that deductions for saccos and other co-operatives towards savings and loan repayments are remitted directly to the respective institutions, resolving the problem of non-remittance.
The Sacco Societies Regulatory Authority (Sasra) supervision report for 2025 revealed that the amount owed to saccos regulated by Sasra increased by 12.3 percent to Sh3.92 billion at the end of last year, up from Sh2.49 billion in the previous year. The number of saccos affected by non-remittances rose from 85 to 89, while the number of saccos members affected nearly doubled to 104,331 from 55,602.
County governments and assemblies accounted for 48.09 percent of the outstanding funds, followed by public universities and tertiary colleges at 18.52 percent, and State corporations at 12.26 percent. Private sector firms accounted for 8.81 percent of the amount owed to saccos. Sasra chief executive David Sandagi noted that the proposed model would remove the employer as an intermediary between the employee and saccos.
Under the proposed approach, employers will receive only the amounts due for payment to employees, while saccos deductions will flow directly to the societies. This change aims to address public sector-related non-remittances. According to Sasra, failure by employers to remit loan deductions has left the affected loans in default or substantially impaired, contributing to non-performing loans and putting pressure on saccos' liquidity.
The Sasra report showed that Sh3.04 billion, or 77.55 percent of the outstanding funds in 2025, represented deductions for loans and other credit facilities, up from Sh2.60 billion. A further Sh879.7 million related to savings deductions. The regulator emphasized that the continued failure by various employer-institutions to promptly remit the deductions made from employees' remuneration to the beneficiary saccos seriously hampers the liquidity position of the regulated saccos.
The check-off arrangement, where employers deduct loan repayments and savings contributions directly from employees' salaries and remit the funds to their respective saccos, has promoted a savings culture through direct deductions from salaries. However, the challenge of non-remittance has undermined these benefits. The implementation of the payroll reforms is expected to resolve this issue and ensure that saccos members receive their savings and loan deductions promptly.
Key points
- The Kenyan government is implementing payroll reforms to directly remit saccos savings and loan deductions to members' accounts.
- The reforms aim to address the Sh3.92 billion non-remittance issue across the industry.
- The changes will centralize payroll processing for government agencies and county governments at the National Treasury.
