The financial woes of the Standard Group, a prominent media conglomerate, are casting a shadow over the stability of Network Sacco, an industry-specific Savings and Credit Cooperative (Sacco) affiliated with the media house. The failure of Standard Group to remit Sacco deductions has raised concerns about the Sacco’s sustainability, as delayed contributions and credit repayment installments jeopardize its operations.
Network Sacco, primarily comprising members from the editorial department and senior management staff at Standard Group, faces a precarious situation due to the financial troubles at its parent organization. The delay in remittances not only impacts contributions but also hinders credit repayment installments, putting the Sacco at risk of collapse.
Sources indicate that the financial challenges at Network Sacco have been brought to the attention of Cabinet Secretary Simon Chelugui, Ministry of Co-operatives and Micro, Small, and Medium-Sized Enterprises (MSMEs) Development, and the industry regulator, the Sacco Societies Regulatory Authority (SASRA).
Addressing employers who fail to remit Sacco dues poses legal complexities, as employers act as agents of the Sacco and are not directly under the regulator’s supervision. Statistics highlight a concerning trend, with a total of KSh 2.81 billion owed to various financial co-operative societies by employer institutions in 2022, down from KSh 3.4 billion in 2021.
The financial crisis at Standard Group has wider implications, affecting Network Sacco’s members who, due to delayed payments, cannot access loans against their deposits or withdraw their deposits if they wish to exit the Sacco.
Peter Njuguna, CEO at SASRA, acknowledges the regulator’s limited authority in dealing with employer non-compliance. While SASRA encourages affected SACCOs to collaborate with employers to understand the delays, the actual powers to take action lie with the office of the Commissioner of Co-operatives Development. However, industry players express skepticism about the Commissioner’s office having sufficient legal authority to address such issues effectively.
In response to the financial crisis, the Kenya Union of Journalists (KUJ) issued a two-week strike notice to the Standard Group. The media group, grappling with delayed payments, emphasized that resolving the issue remains a “top priority” amid ongoing restructuring efforts.
The intersection of financial challenges at the Standard Group and the potential fallout for Network Sacco underscores the delicate balance within cooperative societies and their reliance on employer remittances. As regulatory bodies navigate legal complexities, the fate of Network Sacco and its members remains uncertain, highlighting broader issues within the cooperative sector that require careful consideration and resolution.
