KABUGU: Please, keep the aliens out of our Saccos

There is no doubt that Cooperative Savings and Credit Organizations (Saccos) play an important role in our economy. They offer low interest rates on loans, high returns on deposits, lower insurance premiums and offer great investment opportunities. They also help to build up a reserve of money.

Saccos have become popular because they are easy to train. Members are also relieved of the fear of attachment of their private property in the event that the company suffers financial losses or goes bankrupt due to the principle of limited liability.

However, despite their centrality, Saccos has continued to face a myriad of challenges, which are curtailing their work, which ultimately limits growth to their members.

The latest attack is the decision to review the law to introduce foreigners into Saccos who are likely to badume key roles in management. We are concerned about losing control of our investments, not least because the proposed changes affect membership, voting rights, and corporate investment decisions.

Aliens will have the right to attend and participate in AGMs and will also be allowed to vote. They will also have the privilege of being elected to the organs of society.

But the question posed by the actors Why would we want to introduce people who did not participate in the growth of the sector and give them control of savings

The proposed changes to the Co-operative Corporations Act and Sacco's Corporations Act will allow the Secretary of the Cabinet, by ordinary resolution, to create "members with social impact" who will not be subject to the primary and normal requirements to which each member is expected to subscribe, including the purchase of a given number of shares to be admitted as a member of a Sacco. This means that foreigners will have more rights than investors.

We are concerned that these people are unfairly gaining from the sweat of our members, who are also at risk of losing control of their economies and ownership of co-operative societies

. than 20,000 unions and companies with an badet base of Sh780 billion. We believe that "members of the social impact" and their masters are after that money. That's why we are against the changes that were proposed earlier this year.

Saccos operate according to several principles, including democratic management, where a cooperative society is run by elected members among and between them. All members have equal rights and are also important to society. We should not allow strangers to destroy this spirit.

Even more serious is the fact that the sponsor (s) of the proposed amendments are not known. This raises further questions about the reasons for these changes.

Skepticism also welcomed the proposal because the new group will benefit from special treatment at the expense of the original members. We also believe that cartels and individuals want to clean up ill-gotten money and they think they can use Saccos to do it.

One of the reasons that Saccos are attacked is the perception that they are mismanaged. It is this perception that has seen the government exclude them from key income generating activities such as Forex trading, and the distribution of tax money and the national payment system. The decision is unfair because it has denied them business opportunities and a chance to grow through diversification.

In July 2016, Kenya's Financial Authority, the Capital Markets Authority, issued a new regulation requiring foreign dealers to want to trade in Kenya to maintain a capital equivalent of Sh50 million. Many Saccos have met this requirement and others, but the government does not let them engage in foreign exchange trading.

We are also unhappy that the government has refused to admit the Saccos into the National Payments System. of financial products and services carry out transactions. They are an important component of the financial system of a country. Some of the borrowers have their accounts in commercial banks. Saccos are forced to deposit money in their commercial bank accounts but the same banks can not make payments via Saccos because they're not in the payment system. This has seen Saccos lose their liquidity. Saccos end up paying higher rates to borrow the same money from banks when they have liquidity problems.

Yet Saccos are some of the most regulated institutions in Kenya. The Sacco Societies Regulatory Authority, the Cooperatives Act and the Central Bank of Kenya regulate Sacco's activities. Based on the above observations, these regulatory frameworks can also be improved if necessary to ensure the survival of Sacco.

In terms of efficiency, the Saccos are top because their management structures start from the local to the national level. . Therefore, I do not see why they should be denied an opportunity to do business.

Instead of punishing them, the government should consider the Saccos as development partners by creating an environment conducive to their work. The government has subject to double taxation – taxation of dividends paid to members as well as corporate income. This is unfair and should stop the growth of Saccos and continue to change the lives of Kenyans.

Mr. Kabugu is the president of the company Unaitas Sacco