Kenya’s SACCOs continued to grow in 2024, even as loan defaults and credit risks increased. The 2024 FinAccess Household Survey shows that borrower defaults rose to 16.6%, up from 10.7% in 2021, raising the likelihood of more Kenyans being negatively listed with Credit Reference Bureaux (CRBs).
Loan Defaults Rising
The Hustler Fund recorded the highest default rates, with 50.9% of rural and 62.2% of urban borrowers failing to repay. Analysts attribute this to a perception that the fund is government money that does not require repayment.
Other loans, including digital and informal credit, also saw increased defaults. The Central Bank of Kenya (CBK) warns that non-performing loans could rise from 17.6% in April 2025 to 21.2% by December 2025, posing significant risks to lenders.
SACCO Growth Amid Challenges
Despite defaults, SACCOs reported steady growth:
- Total assets grew by 10.1% to KSh1.08 trillion
- Gross loans increased by 11%
- Member deposits rose by 10.7%
However, non-performing loans in deposit-taking SACCOs rose 19.7% to KSh53.1 billion, with provisions for loan losses up 26.6% to KSh55.5 billion.
Mismanagement Concerns
Mismanagement in secondary SACCOs, especially the Kenya Union of Savings and Credit Cooperatives (KUSCCO), caused losses of KSh13.8 billion, equivalent to 7.3% of core capital.
The Sacco Societies Regulatory Authority (SASRA) has directed SACCOs to recognize impairment losses earlier and improve governance to prevent financial overstating and contagion risks.
Outlook
The launch of Sacco Central is expected to provide liquidity support, shared technology, and payment solutions. Still, CBK cautions that without reforms to reduce defaults and strengthen oversight, both households and SACCOs face heightened financial risks.
