SACCOS have helped to ease the burden of many employers the burden of giving loans to their staff, a move that enabled institutions to maintain healthy and sound balance sheets.
The PPF Director General, Mr William Erio, said the coming of SACCOS shifted the task of giving loans to employees from employers to savings societies. "SACCOS are a relief for employers and employees," Mr Erio said adding in most cases it has transformed workers' lives for the better," he said.
Knowing the importance of the societies on improving workers' welfare, the fund has so far issued 46bn/- credit to various SACCOS and this year's target is 15bn/-. "SACCOS are good loan payers. The repayment is very good as it is between 98 and 99 per cent," he said. The MD said so far only two SACCOS failed to repay their loans on time because some of their workers were transferred from a government institution to the ministry thus complicating the process.
"In total we have extended loans to 38 SACCOS, which most of their members are also PPF members," Mr Erio, who led PPF delegation tour to the 'Daily News' headquarter, said. On the price, he said, the fund is offering an attractive interest rate of 12 per cent which is still below the inflation rate, but hinting of revisiting it to either up or down depending on the consumer price index behaviour.
He said, though, SACCOS constitute only 2.0 per cent of the total fund investment portfolio, "the window is used as an incentive to woo and retain members" and not revenue generating vehicle. He also said that PPF's total value at the end of last year stood at 1.07tr/- and it is projected to double in the next three years to December 2015.
Until 2011, according to the Ministry of Finance and Economic Affairs, the number of SACCOS reached 5,346 and membership stood at 970,665 while credit toward the societies was 399bn/-. On other hand, credit extended to members increased too, reaching 627.2bn/- in 2011 from 539.2bn/- in 2010 equivalent to an increase of 16.3 per cent.