The Awe Diaspora Savings and Credit Co-operative Society Limited (Awe Diaspora Sacco) has officially ceased operations following complications arising from Kenya’s evolving regulatory framework for diaspora Saccos. The closure was formally gazetted by the Commissioner for Co-operative Development, with the appointment of a liquidator to oversee the winding-up process.
Regulatory Hurdles Lead to Closure
Awe Diaspora Sacco’s closure highlights the increasing difficulties faced by diaspora Saccos due to new regulations introduced by the Sacco Societies Regulatory Authority (SASRA). Previously, diaspora Saccos operated under the Ministry of Industrialization and Enterprise Development. However, under the new framework, they are now subject to SASRA’s oversight, which brings additional compliance requirements and financial levies.
The regulations, enacted under the Sacco Societies (Specified Non-Deposit Taking Business) Levy Order, 2022, required diaspora Saccos to pay an annual levy to SASRA. This has placed a financial strain on smaller diaspora Saccos that were already struggling with sustainability. Additionally, the new requirements include strict reporting and governance structures, making it difficult for some Saccos to comply.
Liquidation Process Begins
Following the cancellation of its registration on August 22, 2024, Awe Diaspora Sacco did not appeal the decision, leading to the appointment of a liquidator. The appointed liquidator, Susan Ong’ondi, will manage the dissolution process, ensuring that assets are accounted for and members’ interests are considered. The liquidation period is expected to last up to one year.
According to the gazette notice, Ong’ondi is authorized to take custody of all the Sacco’s properties, books, and documents necessary for the completion of the liquidation process. Members of the Sacco will now have to wait for communication on how their savings will be handled as part of the dissolution.
What This Means for Other Diaspora Saccos
The closure of Awe Diaspora Sacco raises concerns about the viability of other diaspora Saccos operating under similar conditions. Leaders of some Saccos, particularly in Europe and North America, have voiced their frustrations, citing the complexity of SASRA’s procedures and the financial burden of compliance. Some have called for exemptions or a tailored regulatory framework that better suits the unique structure of diaspora Saccos.
With the Kenyan government tightening oversight on the cooperative sector, more diaspora Saccos may face similar challenges unless policy adjustments are made to accommodate their distinct operational models.
Conclusion
The shutdown of Awe Diaspora Sacco serves as a wake-up call for the diaspora Sacco movement. While regulation is essential for accountability and financial stability, it must also consider the unique dynamics of diaspora-based institutions. As the liquidation process unfolds, stakeholders will be watching closely to see how this case shapes the future of diaspora Saccos in Kenya.
For now, former members of Awe Diaspora Sacco are left to navigate the uncertainties of the liquidation process, hoping for a fair resolution regarding their investments.
