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"id": 183714,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/183714/?format=api",
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"type": "speech",
"speaker_name": "Mr. Mureithi",
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"speaker": {
"id": 89,
"legal_name": "Erastus Kihara Mureithi",
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"content": "Thank you, Mr. Deputy Speaker, Sir. I rise to support the SACCO Societies Bill. This is a privilege for me because I was present when the name \"SACCO\" was originally created in 1985. It came as a result of a lot of research and we had to abbreviate the long name to come up with \"SACCO\". The co-operative financial intermediation, through the saccos, is very necessary for a low- income country like Kenya. If we do not have intermediation, we still become subject to the mercies of the banks and the shylocks in the nation. Therefore, the enactment of the SACCO Societies Bill will go a long way in supporting the financial intermediation in this country as it has happened in many other developed countries. Mr. Deputy Speaker, Sir, I would like to submit that SACCOs are finding it difficult to survive at the moment because of the onslaught of the major commercial banks. They lack effective governance structures and internal controls. By establishing the SACCO Societies law, it will enable the Minister and the relevant Authority to make effort in looking at the management and effectiveness within the governance structure and internal controls of SACCOs. If we were to wait longer without enacting this Bill, we will go the same way South America, went where the credit unions started failing one by one and created a domino effect where all other large SACCOs failed and finally, they pulled down the banks in the countries in South America. They had to sit down and reinvent the wheel so that they could start credit unions once again and enact laws that would support even the commercial banks. Therefore, this SACCO Societies Bill goes a long away to protect such a domino effect that might take place here, where large SACCOs would fail and pull down with them all other SACCOs, including large financial and banking institutions. Mr. Deputy Speaker, Sir, therefore, we must go ahead and protect these SACCOs through this law so that we avoid failing, the way they did in South America and then be able to strengthen them in order to provide intermediate financing within communities in this country. I would like to say that as we go ahead in supporting this Bill, we must create different models in terms of lending that will cushion the future growth of this country. SACCOs are creating that vehicle of development in this nation because we do not have any other source of affordable funding apart from them. Since they can now leverage in terms of their strength, they will be able to bring down October 16, 2008 PARLIAMENTARY DEBATES 2819 the interest rates because right now, they charge at 1 per cent per month which amounts to 12 per cent per year on a declining interest rate. This means that they will be able to stabilise the current interest rates which most Kenyans are finding difficult to service. Therefore, I would like to submit that SACCOs are going to be instruments of development. For us to achieve the dream of the Millennium Development Goals (MDGs) and Vision 2030, we need to strengthen them. Mr. Deputy Speaker, Sir, I am very grateful to the Minister for Co-operative Development and Marketing for having embraced the issue of SACCOs such that nobody in this country will be allowed to start a SACCO without due diligence and compliance with the SACCO law. I am very grateful to the Minister because when that was being submitted to him, he accepted that anybody who wants to form a SACCO must follow the structure. I am also very proud to see that the Bill will provide some comfort to the depositors by establishing a Deposit Guarantee Fund (DGF) equivalent to the Deposit Protection Fund (DPF). Right now, when co-operatives \"die\", particularly the credit union of the SACCO co-operatives, the depositors are left at the mercy of the management. Now, with the law in force, what will happen is that, the depositors will be able now to recover a bit of their money which they have not been able to, hitherto to this Bill. I think this should be looked into and that fund should be protected to avoid a situation similar to what is happening in the National Social Security Fund (NSSF) where a fund becomes too large and it becomes a subject of abuse. Therefore, I would like to submit that, that fund must be looked into with a toothcomb and must be protected so that depositors will feel comforted. Mr. Deputy Speaker, Sir, I would also like to submit that the fact that we are now able to separate deposits from shares--- This is an issue that has bothered depositors because their money never grows into value. Now, their money is going to grow into value such that we can credit and the SACCOs can even now ask the stock market to be allowed to go to the alternative table where right now they are locked out of the resources of this country. Considering what we saw with the Safaricom Initial Public Offer (IPO), Kenyans have a lot of money. If we were to allow SACCOs to create value through a market like the stock market without going through the rigours as it is required today, it could create a source of income for the development of this nation. Right now, we do not have that vehicle. We go through difficulties. However, SACCOs are now going to provide that avenue that is going to create funds which are affordable to our people in this nation. As I stated, we are a low income country and all we require is enough injection of capital into this system and an alternative table where over the counter trading that is established in the stock market will give light to our SACCOs. They will make them not only local but they will become international institutions. Mr. Deputy Speaker, Sir, if you look at the models in the Scandinavian countries, that is how they started. If you look at the Rabobank in Poland which in the only bank worldwide that commands Triple A (AAA) in the banking world, it started as a credit union. Look at the model in America. You can pay all your bills through the credit union. Why not Kenya? I know there are a lot of people who are opposed to this Bill but I am pleading through you that we embrace it because it is going to become a fact and as a stimulant to the growth of this nation. Mr. Deputy Speaker, Sir, once we do that, the regulation, supervision and inspection of these institutions will be of paramount importance. This is because we will have to now start monitoring the performance of each individual credit institution. So, the Minister must be able to recruit enough staff because we have so many of them. They are over 4,000 credit unions. He must have enough personnel in order to track down on their performance and be able to monitor them so that we do not have crooks coming and taking over these SACCOs and going away with the money of the people. Since they are scattered all over the country, I would beseech the Minister to move 2820 PARLIAMENTARY DEBATES October 16, 2008 with speed to introduce the E-Government system within his Ministry so that he can link all of them to a central point for purposes of monitoring and evaluation of the SACCOs. Mr. Deputy Speaker, Sir, I would also like to say that because of this SACCO Bill, Kenya will now see a different format in terms of creating a new source of funding for rural development, industrialisation and solve the unemployment crisis that we have in this country. If these SACCOs are properly monitored and directed through proper governance, we are likely to see this country developing much faster than we anticipated. With those remarks, I support."
}