Ukulima Sacco freezes staff loans

PHOTO | FILE The Ukulima Co-operative Savings and Credit Society offices in Mombasa. The Sacco said in a circular last week that it would not be processing any loan applications.  NATION

In Summary

• Ministry workers bear the brunt of the devolution mess and looming retrenchment
• The Ukulima Co-operative Savings and Credit Society said in a circular last week that it would not be processing any loan applications.
• This development left a ministry official in a bind because he had hoped to borrow money to send his child to Form One.

By
More by this Author

A leading cooperative society has stopped advancing loans to its members until the deployment of staff from the national government to the counties is completed.

The Ukulima Co-operative Savings and Credit Society said in a circular last week that it would not be processing any loan applications.

The Sacco, which draws its membership from employees of the Agriculture, Livestock and Fisheries ministry, asked them to provide a letter of appointment for their loan applications to be approved.

The national government is currently transferring staff from the central government to counties as devolution takes shape, but confusion over how employees are to be absorbed at the county level persists.

“Arising from devolution of government services to counties and subsequent posting of staff, some of whom are our members, and with a view to maintaining seamless services, it has been decided that with effect from this circular, members applying for a loan from the Sacco will be required to provide a posting letter from the county, recent certified payslip (January 2014) and confirmation letter from new employer,” said the circular dated January 24 and signed by the chief executive officer Henry Nakaya.

IN A FIX

This development left a ministry official in a bind because he had hoped to borrow money to send his child to Form One.

“I will be taking a child to secondary school this week and was shocked when I was informed that new loans would not be provided until the payroll data from the counties is provided. I was told the mechanism of the recovery of the loans has to be established first. This has left me in a fix,” said Mr Bernard Murithi.

He said some of his colleagues have been absorbed by the county governments but have not been given new appointment letters, while the payslips for January had not been prepared by last week
The repayment of loans to Saccos and other lending institutions is done from a central point — The Integrated Payroll and Personnel Database — through a check-off system, but because some of the staff are being redeployed to county governments, the system, as it is, cannot not be relied on.

And as result of the confusion, many more financial institutions are likely to issue similar directives in a bid to cushion themselves from possible losses.

The matter was also compounded further following the government’s recent announcement that it would retrench some of its staff.

Two weeks ago, President Uhuru Kenyatta ordered a recount of civil servants to update the payroll after it was discovered that the government could be losing Sh1.8 billion every year through payments to ghost workers.

“Devolution will affect the operations in a profound way because the remittances will come from the 47 counties, meaning the amounts will not reach at same time. This will increase the workload.

“The other possible outcome is that some members might opt to join Saccos that are county-based for easier transactions,” said a source in the Ministry of Industrialisation and Enterprise Development who did not wish to be named because he is not authorised to speak for the ministry