You risk having your bank account seized and further compelled to pay interests on defaulted payments as an employer if you default Savings and Credit Cooperative Organizations (SACCOs) members’ dues according to a latest warning by the government.
Sounding the warning, Cooperative, Micro, Small and Medium Enterprises (MSME) Cabinet Secretary Simon Chelugui said the issue of non-remittance of members’ contributions by employers to Saccos will be handled through a legal framework. The CS said that a new Cooperative Bill 2023 has been drafted with the intention of breathing a wave of fresh air to the co-operative movement. The commissioner for cooperatives has been given more powers to deal with the employers hindering their employees from benefiting from their contributions.
Out of Kshs. 4 billion that was outstanding at the beginning of the year, the Ministry has facilitated recovery of Kshs. 500 million. The defaulters have through mediation by the State Department of Cooperatives entered into agreements on how to clear the balance and the Ministry he said is keenly monitoring them with a view of initiating legal redress in case of defaulting the terms of agreements.
“The bill has created a powerful position of the commissioner for cooperatives, rekindling moments the movement enjoyed of a powerful commissioner before the liberation of the subsector in the 1990s. The bill will equally help to correct numerous failures the movement is grappling with, mainly poor governance, poor image and low penetration.” said Chelugui. He was speaking in Naivasha when he opened the annual cooperative leaders consultative conference. The bill has already received cabinet approval and forwarded to the Attorney General for submission to Parliament.
Chelugui added that he was concerned that a substantial number of Saccos are facing financial difficulties as employers fail to remit employees’ deductions. The main culprits have been identified as County Governments and agencies in line ministries. The CS warned that recovery of the debts will going-forward be anchored in law and employers subjected to tough penalties which include capture of their bank accounts. Part of the provisions in the bill includes empowering the commissioner for cooperative to apply tough penalties to employers who fail to remit member deducted dues.
“The bill has provided an elaborate procedure of recovering defaulted payments to the Saccos and the penalties will be preferred against the employers accused of withholding the Saccos member dues,’ opined Chelugui.
The Commissioner for Cooperatives David Obonyo reiterated the concerns and promised action. “Section 73 (1) of the cooperative bill states Where an employer of a person who is a member of a Cooperative has, under the instructions of the employee, made a deduction from the employee’s remuneration or payment for produce for remittance to the Cooperative concerned but fails to remit the deductions within seven days after the date upon which the deduction was made, the employer shall be liable to pay the sum deducted together with compound interest thereon at a rate of not less than five per cent per month,” said Obonyo.
If enacted into law the Commissioner will have powers to appoint through a written notice, appoint any person, bank or institution to be an agent of the Cooperative for the purposes of collection and recovery of a debt owed to the Cooperative.