SMEReport

2014
THE EXTENT TO WHICH DEPOSIT TAKING

SACCOS PROVIDE FINANCIAL SERVICES TO
MICRO, SMALL AND MEDIUM ENTERPRISES
Final Report
Prepared by
Associate Consulting Africa Ltd
July-Sep 2014
Consulting Team
John Wamugunda Team Leader/CEO
Ephraim Njega Lead Consultant/Principal Author
Mwangi Maina Consultant
Joshua Owuoche Research Manager
Elizabeth Nyakwea Contact and Quality Assurance
DISCLAIMER
We wish to point out that the opinions expressed in this report are solely those of the authors.
Whereas extreme care and effort have been deployed to ensure that this work is of the highest
quality possible we nonetheless take responsibility for any errors or omissions that may
remain. Further, we submit that the sentiments presented hereinafter do not in any way
represent the official position of The SACCO Societies Regulatory Authority (SASRA) or its
associates.
Signed: _______________________ Date: ____________________

Name: Ephraim Njega
Designation: Lead Consultant
Signed: _______________________ Date: ____________________

Name: John Wamugunda
Designation: Team Leader/CEO
For and on behalf of Associate Consulting Africa Ltd, Nairobi Kenya

http://www.associateconsultingafrica.com/
Copyright 2014. The SACCO Societies Regulatory Authority

All Rights Reserved. Proper acknowledgement must be provided whenever the work is quoted
All brand names quoted are property of their respective owners
II | P a g e
ACKNOWLEDGEMENT
We would like to thank The SACCO Societies Regulatory Authority for providing finances
for the survey and for giving us the opportunity to undertake it.
We would also like to acknowledge all the support received from the many staff in SASRA
who we approached for support during the assignment period. The research team at SASRA
was led by Mr John Mwaka.
Further, we wish to acknowledge the team of data collectors, research assistants and data
entry clerks who traversed the country collecting the data and spent numerous hours
processing the same. This team was led by Joshua Owuoche.
Finally we are deeply indebted to all the respondents who took time off their busy schedules
to respond to the survey questions. Be assured that your input will greatly impact the
supervision, regulation and promotion of Deposit Taking SACCOs and enhance their
capacity in offering financial services to Micro Small and Medium Enterprises.
ACAL Team
Jul-Sep 2014
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TABLE OF CONTENTS
ACKNOWLEDGEMENT ....................................................................................................... III

LIST OF FIGURES .................................................................................................................. V
LIST OF TABLES ...................................................................................................................VI
ACRONYMS AND ABBREVIATIONS .............................................................................. VII
EXECUTIVE SUMMARY .................................................................................................. VIII
CHAPTER ONE: INTRODUCTION ........................................................................................ 1
CHAPTER TWO: OVERVIEW AND SURVEY BACKGROUND ........................................ 3
CHAPTER THREE: FINANCING OF MSMES BY SACCOS ............................................. 11
CHAPTER FOUR: ACCESS TO SACCO FUNDS BY MSMES .......................................... 19
CHAPTER FIVE: PROVISION OF BUSINESS FINANCE SERVICES BY SACCOS ....... 26
CHAPTER SIX: CHALLENGES OF MSME FINANCING BY SACCOS .......................... 31
CHAPTER SEVEN: REGULATORY ENVIRONMENT ISSUES........................................ 35
CHAPTER EIGHT: CONCLUSIONS AND RECCOMMENDATIONS .............................. 38
REFERENCES ........................................................................................................................ 40
APPENDICES ......................................................................................................................... 41
Appendix A: Sampling Plan ............................................................................................. 41
Appendix B: List of Respondent Saccos .......................................................................... 43
Appendix C: Data Collection Tools ................................................................................. 46
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LIST OF FIGURES
Figure 1: Graph of GDP Growth Rate ....................................................................................... 3

Figure 2: Commercial Banks Weighted Average Lending Rates .............................................. 4
Figure 3: Overall Rate of Inflation............................................................................................. 5
Figure 4: Exchange Rates for Key Select Currencies ................................................................ 5
Figure 5: Assets Held by Players in the Financial Services Sector ........................................... 7
Figure 6: Kenyas Proportionate Contribution to Africa Sacco Subsector ................................ 9
Figure 7: Availability of MSME Loans in Saccos ................................................................... 11
Figure 8: Percent of Loan Portfolio Disbursed to MSMEs...................................................... 12
Figure 9: Willingness to Scale up Lending to MSMEs ........................................................... 13
Figure 10: Sources of Funds for MSME Lending ................................................................... 13
Figure 11: Availability of Untapped Sources of Funds ........................................................... 14
Figure 12: Preferred Alternative Sources of Funds for MSME Lending................................. 15
Figure 13: Challenges in Accessing Alternative Sources of Funding ..................................... 15
Figure 14: Support Needed by Saccos to Access more Funding for Lending to MSMEs....... 16
Figure 15: Perception on Repayment Rate of MSME Loans .................................................. 17
Figure 16: Disaggregation of MSME Loans by Enterprise Categories ................................... 18
Figure 17: Extent to Which Development Loans are Used for Business Purposes ................. 18
Figure 18: Respondents Duration in Business ......................................................................... 19
Figure 19: Type of Business the Respondents are Engaged in ................................................ 20
Figure 20: Duration of the Respondents Sacco Membership ................................................. 20
Figure 21: Factors Motivating MSMEs to Join Saccos ........................................................... 21
Figure 22: Access to Financial Services .................................................................................. 22
Figure 23: Past Borrowing from Sacco for Business Purpose ................................................. 22
Figure 24: Security Mechanisms Utilized by MSMEs in Borrowing from Saccos ................. 23
Figure 25: Purpose of Borrowing from Saccos by MSMEs .................................................... 24
Figure 26: Reasons for Preferring to Borrow from Saccos...................................................... 25
Figure 27: Availability of Core Business Finance Services by Saccos ................................... 26
Figure 28: Availability of Other Financial Services ................................................................ 27
Figure 29: Willingness by Saccos to Offer More Business Finance Services ......................... 27
Figure 30: Business Finance Services Saccos are willing to Offer in the Future .................... 28
Figure 31: Support Saccos need to offer More Business Services .......................................... 29
Figure 32: Ability to Access Services Using Mobile Phone.................................................... 29
Figure 33: Financial Services Available to MSMEs via Mobile Phone .................................. 30
Figure 34: Challenges Faced by Saccos in Servicing MSMEs ................................................ 31
Figure 35: Support Needed by Saccos to Overcome Challenges in Serving MSMEs............. 32
Figure 36: Challenges Faced by MSMEs while Accessing Services from Saccos.................. 33
Figure 37: Suggestions by DTS on Improvement of Regulatory Environment....................... 35
Figure 38: Suggestions by MSMEs on Improvement of Regulatory Environment ................. 36
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LIST OF TABLES
Table 1: Composition of Financial Institutions ......................................................................... 6

Table 2: Performance of the Sacco Subsector in 2013 .............................................................. 8
Table 3: Performance of the Deposit Taking Saccos in 2013 .................................................... 8
Table 4: Extent of Sacco Lending to MSMEs ......................................................................... 12
Table 5: Lending to Businesses by Banks as at 31st December 2014 ...................................... 12
Table 6: Characteristics of MSME Lending by Saccos ........................................................... 16
Table 7: Ability to Disaggregate Loans by Given Business Criteria ....................................... 17
Table 8: Sampling Plan ............................................................................................................ 41
Table 9: Respondent Saccos .................................................................................................... 43
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ACRONYMS AND ABBREVIATIONS
ACAL Associate Consulting Africa Ltd

APR Annual Percentage Rate
ATM Automatic Teller Machine
BOSA Back Office Savings Activity
CBK Central Bank of Kenya
CMA Capital Markets Authority
CRB Credit Reference Bureau
DTs Deposit Taking Saccos
FOSA Front Office Savings Activity
FSRF Financial Sector Regulators Form
GDP Gross Domestic Product
ICT Information Communication Technologies
IRA Insurance Regulatory Authority
KBRR Kenya Banks Reference Rate
KFSSR Kenya Financial Sector Stability Report
KIPPRA Kenya Institute of Public Policy Research and Analysis
KNBS Kenya National Bureau of Statistics
MFI Micro Finance Institution
MPC Monetary Policy Committee
MSME Micro Small and Medium Enterprises
RBA Retirement Benefits Authority
SACCOs Savings and Credit Cooperatives
WOCCU World Council of Credit Unions
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EXECUTIVE SUMMARY
The survey was undertaken in July-September 2014 by Associate Consulting Africa Ltd.
Data was collected in July-August 2014. In view of the critical role played by both the Saccos
and MSMEs it was found necessary to conduct a research with the overall objective of
determining the extent to which Saccos provide financial services to MSMEs.
Findings in relation to funding of MSMEs by Saccos include the following;

i. Majority of the Saccos at 63.7% had loan products targeted at MSMEs while 36.3%
did not have such products
ii. A huge bulk of the allocation i.e. 64.1% is currently available to non business
customers while 35.9% is allocated to business customers
iii. Going by the volume of Sacco loans in 2013 the above percentages show that at least
KShs 70.7 billion was lent to businesses by Saccos in 2013
iv. Majority of the respondent Saccos would be willing to expand their lending to
MSMEs at 67% while 8% were unwilling while 25% did not respond to the question
v. The major source of funds used for lending is member contributions/savings at 76%.
Other internal sources include non-withdrawable deposits at 6%, Fosa deposits at 2%
and other Sacco income at 3%. Thus internal sources account for 87% of funds lent to
MSMEs while the other 13% is accounted for by external sources such as loans
vi. Majority of the Saccos at 60% have other sources of funds they would like to tap into
and are currently unable to, 25% do not have such while 15% did not respond
vii. Saccos in seeking alternative funding sources face a number of challenges key
amongst them being strict requirements/bureaucracy at 33%, inadequate government
support at 29% and legal restrictions/SASRA regulations at 21%
viii. Regarding suggestions on support to enhance access to more funds key suggestions
include government funding and support at 35%, enhancement of member education
at 32% and provision of information and linkages with creditors at 21%.
ix. Regarding perceptions on repayment rate by MSMEs 2% of the respondents view it as
excellent, 30% as very good and 51% as good. A further 16% perceive it as fair while
1% perceives it as poor
x. Majority of the loans availed to MSMEs are issued to micro enterprises at 29% and
small enterprises at 40%. Thus micros and small enterprises account for 69% of such
lending with the balance being accounted for by medium enterprises at 22% and large
enterprises at 9%
xi. Regarding the use of development loans for business purposes 10% think that
development loans are to a very large extent used for business, 53% to a large extent,
25% to a small extent and 5% to a very small extent while 7% did not respond.
Key findings in terms of borrowing from Saccos by MSMEs are as follows;

i. The key factors motivating MSMEs to join Saccos include; to borrow from the Sacco
at 40%, to develop a saving culture at 28% and low interest rates at 24%
ii. The respondents had access to various financial services during the previous business
year with access to Sacco being the highest at 97%, banks at 66% and mobile
financial services at 45%
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iii. Since joining the Sacco majority of the respondents had at one point or other taken a
business loan. This constitutes 91% of the respondents, 6% hadnt taken business
loans while 3% didnt respond to the question
iv. The most common methods of guaranteeing the loans are guarantors at 81%, salary at
16% and collateral at 14%
v. Key reasons for borrowing the funds include business expansion at 34%, cash flow
enhancement at 28% and buying of business assets at 16%.
vi. The main reasons for preferring Saccos are low interest rates at 71% followed by
favourable terms and conditions at 16% and easy security options at 13%
Key findings with regard to access to business financial services are as follows;
i. The provision of business finance services is relatively low in Saccos. The common
services are asset financing and cheque discounting each at 46%. Others are overdraft
facilities at 45% and insurance premium financing at 32%
ii. Other business essential financial services available include cheque deposit at 81%,
access to ATM at 71% and insurance products at 42%
iii. Majority of the Saccos would be willing to offer more financial services. Up to 68%
responded positively, 20% responded negatively while 12% didnt respond
iv. Some of the business finance services Saccos are desirous to offer include asset
finance at 29%, business loans and mortgage each at 17% and cheque
clearance/deposit at 15%.
v. The key support needed so as to offer more services include capacity building at 40%,
access to more/cheaper funds at 39%, clear/flexible legal framework at 20% and
government support also at 20%
vi. Up to 45% of the respondents were able to access services via the phone while 50%
were not and 5% didnt respond to the question
vii. Services commonly available via the phone include deposits/withdrawals at 58%,
checking balance at 17%, access to statement and loan repayment each at 13% and
mobile alerts/notifications at 9%
With regard to challenges encoutered in offering services to Saccos the findings are thus;
i. The key challenges encountered by Saccos while offering services to MSMEs include
default risks/poor repayment at 51%, inadequate funds to lend at 38% and securing
loans i.e. guarantors/collateral at 23%. Others are lack of proper legal framework at
23% and difficulties in evaluating the MSMEs at 21%
ii. The key suggestions on overcoming above challenges are capacity building and
expanding sources of external funds each at 30% and making the legal framework
flexible and clear at 23%. Other suggestions are education of members on use of
funds at 20% and access to full credit information from CRBs at 15%
iii. The key challenges faced by the MSMEs in accessing services from the Saccos
include delay in processing loan request at 31%, limitation in amount of money that
can be borrowed at 29% and getting guarantors for a loan at 24%. Others are poor
service at 12% and repayment period being too short at 8%
With regard to improving the regulatory environment the key findings are as follows;
i. The key issues suggested by the Saccos include capacity building for Saccos at 16%,
make regulations facilitative not restrictive at 13% and regulations to expand access to
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external sources of funds at 10%, facilitating sharing of defaulters information at 9%
and strengthening of MSME regulation and laws at 6%.
ii. Key suggestions by MSMEs on the improvement of the regulatory Environment
include lower/regulate interest rates and fees at 28%, review restrictive Sacco bylaws
and terms at 27% and assist Saccos improve efficiency at 15%
In view of the above the following recommendations are made;

i. SASRA should assist Saccos through regulatory and other support to access diverse
sources of funds including but not limited to capital markets
ii. Saccos through their umbrella bodies should lobby national and county government to
provide them with cheap funding for onward lending to MSMEs
iii. Saccos should have a way of accessing a centralized lender to cater for short-term
gaps like is the case with banks
iv. The provisions in the Sacco Societies Act need to be reviewed to provide for
prudential guidelines on lending to MSMEs
v. Saccos should allow for diverse loan guarantee mechanisms other than guarantors so
that MSMEs can use collateral to secure loans without any need for guarantors
vi. Saccos should be allowed unfettered access to full borrower information from the
credit referencing bureaus. The CRB law needs to be amended accordingly
vii. Saccos should keep proper records and disclosures on business lending and categorize
business loans according to type of businesses financed.
viii. There is need for a policy guideline/framework on lending to MSMEs by SACCOs
ix. Saccos capacity needs to be enhanced to ensure they take full advantage of the
regulated environment. This includes civic education on legal framework, training on
MSME financing and improvement of technology and corporate governance
x. Saccos should be allowed access to the national payment system to ensure they can
seamlessly offer various payment solutions required by businesses
xi. Saccos should exploit the SASRA license to mainstream themselves in the national
financial system. The current regulation regime has improved stability and outlook of
the sector and Saccos should take advantage of that to position themselves
xii. Promoting Saccos ability to offer a broad array of services will minimize the need for
Saccos to want to convert into banks or acquire banks
xiii. Players seem to have many issues with the regulatory environment. SASRA should
consider creating a stakeholders forum that can work to ensure the laws and
regulations are clear and flexible and that they are understood and accepted
xiv. SASRA should create regulations that enhance speedy resolution of disputes and
conflicts. A responsive complaint handling mechanism should be put in place
xv. The supervision needs to be tightened and more frequent reporting of Saccos and
publishing of results is needed to enhance transparency and confidence in the sector
xvi. SASRA needs to create more awareness on its roles and mandate and to enhance its
image among stakeholders so that it is viewed as a facilitator rather than a road block.
This should begin with DTS followed by SACCO members and the general public
xvii. The Sacco movement needs to be better organized and to have a strong umbrella body
like other financial sectors. This will ensure laws and regulations accommodates the
sectors interests and also promote self regulation where possible
X|Page
1 CHAPTER ONE: INTRODUCTION
1.1 Background
T
he financial services sector plays a crucial role in the economy. According to Kenya
Financial Sector Regulators Forum (2014) the Banking subsector by total assets
accounted for 160 percent of the countrys Gross Domestic Product at Constant
Market Prices in 2013; Pension subsector accounted for 41 percent of GDP; Insurance
subsector accounted for 20 percent; while Saccos subsector accounted for 17 percent of GDP.
Capital Markets measured by market capitalization accounted for 114 percent of GDP in
2013.
Saccos are critical in ensuring financial inclusion and to achievement of Kenyas national
development blue print Vision 2030. Sacco membership in 2013 rose to 3.3 million and
savings in Saccos accounted for 48.55% of gross national savings, (SASRA, 2014). As of
December 2013 there were 1,995 active Saccos. Out of these 135 were licensed as Deposit
Taking Saccos out of 215 which have applied to be licensed as such.
On their part MSMEs play a crucial role in job and wealth creation accounting for majority of
new jobs created. According to Kenya Institute for Public Policy Research and Analysis
(KIPPRA, 2013), the Micro and Small Enterprise (MSE) sector in Kenya is an important and
fast growing sector employing 42 per cent of the working population, and accounting for 75
per cent of all modern establishments in Kenya as at 2011. Most of these enterprises operate
informally thus making informal sector critical to the economy. According to Kenya National
Bureau of Statistics (KNBS, 2014) the informal sector is estimated to have created 625,900
new jobs in 2013 accounting for 84.3% of all new jobs.
Thus in view of the critical role played by both the Saccos and MSMEs it was found
necessary to conduct a research with the overall objective of determining the extent to which
DT Saccos provide financial services to MSMEs.
1.2 Purposes of the Study

In view of the financing gaps and challenges faced by MSMEs there is need to explore how
such gaps can be closed through better matching of demand and supply. The purpose of the
study therefore is to determine the baseline situation as far as financing of MSMEs by
SACCOs is concerned and to explore how this can be enhanced.
1.3 Objectives of the Study

i. To determine the extent to which SACCOs finance MSMEs
ii. To establish the challenges SACCOs encounter in financing MSMEs
iii. To determine the challenges MSMEs face in accessing financing from SACCOs
iv. To make recommendation on policy direction that SASRA can pursue to ensure
increased role of SACCOs in financing and promoting MSMEs
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1.4 Definitions
According to the Micro and Small Enterprises Act 2012 the following summarized
definitions have been adopted;
i. micro enterprise means a firm, trade, service, industry or a business activity (a)
whose annual turnover does not exceed KShs 500,000; (b) which employs less than
ten people;
ii. small enterprise means a firm, trade, service, industry or a business activity (a)
whose annual turnover ranges between KShs 500,000 and KShs 5M; and (b) which
employs between 10 and 50 people;
iii. Though a medium enterprise is not defined in this Act the common definition based
on the above definition would be turnover of between KShs 5M and KShs 500M and
employing between 50 and 100 people
1.5 Research Methodology

The study employed both secondary and primary research methodologies. Primary research
involved collecting data from the Deposit Taking SACCOs and MSMEs. A total of 113 DTS
were sampled. The total number of MSMEs sampled was 492. The focus on the DTS was
based on the fact that they control up to 78% of the industrys total assets (SASRA, 2013).
The DTS were selected from a list provided by SASRA on a random basis. On the other hand
the MSMEs were obtained from lists provided by the Saccos and the actual respondents
randomly selected and thereafter harmonized to ensure proportionate representation of each
category of the enterprises. The geographical coverage included all the counties where the
DTS exist however Lamu and Tana River counties were omitted due to security reasons.
The data was collected in August 2014. Data for the DTS was collected using self-
administered questionnaire whereas the data for the MSMEs was collected using interviewer
administered questionnaire. The questionnaires comprised both close and open ended
questions. The data was entered and analyzed using Microsoft Excel.
1.6 Structure of the Report

Chapter One of the report deals with introduction of survey and the research methodology.
Chapter Two deals with literature review and macro economic updates. On the other hand
Chapter Three deals with funding of MSMEs by Saccos while Chapter Four explores how the
MSMEs access funds from Saccos.
Chapter Five addresses itself on the issue of provison of business financial services to
MSMEs by Saccos while Chapter Six explores how the challenges encountered in offering
the services can be resolved. Chapter Seven delves into the regulatory environment and
explores how it can be improved for the benefit of players in the sector. Finally Chapter Eight
deals with conclusions and recommendations on the way forward.
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2 CHAPTER TWO: OVERVIEW AND SURVEY
BACKGROUND
2.1 Kenya Macroeconomic Update

2.1.1 GDP Growth Rate
According to rebased GDP figures the economy grew by by 5.7% in 2013. The growth rates
for preveious years are shown below depicting both the previous and revised GDP Figures
Figure 1: Graph of GDP Growth Rate
Sources: KNBS, 2014
While these positive trends are expected to be sustained over the coming years they are still
way below the over 10% growth rate needed to achieve Vision 2030 targets. Various risks
such as uncertainty regarding growth in key world economies persist. There also risks of
insecurity, regional political instability and climate change in agriculture dependent economy.
However opportunities also exist among them political stability brought about by
Constitution of Kenya 2010, discovery and exploitation of critical natural resources in the oil,
minerals and gas sectors. Opportunities also exist due to increasing regional integration. All
in all the GDP outlook remains positive for the medium term.
Furthermore the rebased GDP figures have catapulted the country into middle income status
and positioned us among Africas top ten economies. This will be critical in attracting new
investments and buttressing Kenyas position as a regional hub.
3|Page
2.1.2 Interest Rates
The interest rates for the 12 months to July 2014 have been fairly stable. Concerns still
remain regarding the high interest rate spread between interest on deposit and interest on
loans. However the introduction of the Kenya Banks Reference Rate (KBRR) and the
Annual Percentage Rate (APR) framework are expected to introduce certainty and
transparency in pricing of loans. This will make credit affordable and spur growth. The
interest rates are shown in the figure below;
Figure 2: Commercial Banks Weighted Average Lending Rates
Commercial Banks Weighted Average Interest Rates

20
18
16
14
% Rate
12
10
8 Deposit
6
4 Savings
2 Lending
0
Overdraft
Month
Sources: Data CBK, Illustrations by the Author
The major commercial banks in the country were charging interest rates between 19% and
25% for unsecured loans while Saccos interest rate ranged between 12% and 14% (before
considering attractive dividends and interest on members savings). On the other hand,
commercial bank prime lending rate (the upper rate of interest charged on unsecured loans by
commercial banks to private individuals and companies) averaged 17.1% comparing
unfavourably to the average Saccos lending rate of 15% in the same year (SASRA, 2014).
This highlights the preference of Saccos over commercial banks by borrowers.
The government has spoken of its determination to reduce borrowing from the domestic
market in order to increase access to credit by the private sector and put a downward pressure
on interest rates. However, rising inflation if not checked may result in higher interest rates.
In its September 2014 meeting CBK Monetary Policy Committee resolved to retain the CBR
at 8.5% arguing that monetary policy operations coupled with effective liquidity management
will moderate the pressures arising from adverse inflation expectations.
2.1.3 Inflation
Inflation remains a key concern to the financial sector due to its adverse impact on
consumers purchasing power as well as erosion of gains made on savings. Inflation has
generally been on upward trend in the recent months. Average overall inflation between
4|Page
January and August 2014 stands at 7.18% well over the CBK preferred target of 5%. The
figure below shows inflation trends for 12 months to August 2014;
Figure 3: Overall Rate of Inflation
Overall Rate of Inflation

9
8
7
6
% Rate
5
4
3
2
1
0
Month
2.1.4 Exchange Rates

Exchange rates remain fairly stable supported by diaspora inflows and investor participation
at the Nairobi Securities Exchange. As at 3rd of September 2014 usable foreign reserves stood
at USD 6376.95 million equivalent to 4.21 months of import cover thus above the required 4
months of import cover1. Foreign exchange stability remains key to overall confidence on the
economy and positive sentiments. The figure below shows the prevailing exchange rates for
key select currencies for 12 months to August 2014;
Figure 4: Exchange Rates for Key Select Currencies
Unweighted Average of Buying and Selling Rates

160
140
Exchage Rate
120
100 United States dollar
80
Sterling pound
60
40 Euro
20
South Africa Rand
0
Japanese yen (100)
Mar-14
Sep-13
Jan-14
Feb-14
Jul-14
Nov-13
Apr-14
Jun-14
Oct-13
Dec-13
May-14
Aug-14
Chinese Yuan
Month
1
Central Bank Monetary Policy Committee Meeting Press Release
5|Page
2.2 Kenya Financial Services Sector Overview
2.2.1 Key Players in Kenya Financial Services Sector
The Kenya Financial Services Sector is a key anchor of the economy. It is composed of the
following institutions;
Table 1: Composition of Financial Institutions
Institution Type No. of Licensees Regulator

Banking Sub-sector
Banks 43 CBK
Mortgage Finance Company 1 CBK
Representative Offices 7 CBK
Bank Agents CBK
Forex Bureaus 112 CBK
Money remittance providers 2 CBK
Microfinance Banks 9 CBK
Credit Reference Bureaus 2 CBK
Sacco Sub-sector
Deposit Taking Saccos 215 (184 licensed) SASRA
Non-deposit Taking Saccos 1,780 Commissioner of Cooperatives
Insurance Sub-sector
Insurance Agents 4,631 IRA
Insurance Brokers 187 IRA
Insurance Investigators 134 IRA
Motor Assessors 105 IRA
Insurance Companies 48 IRA
Medical Insurance Providers 29 IRA
Insurance Surveyors 27 IRA
Loss Adjusters 22 IRA
Risk Managers 8 IRA
Reinsurance Companies 3 IRA
Claims Settling Agents 2 IRA
Capital Markets Subsector
General Institutions e.g. NSE 5 CMA
Investment Banks 13 CMA
Stock Brokers 10 CMA
Fund Managers 24 CMA
Investment Advisers 17 CMA
Authorized Depositories 14 CMA
REIT Managers 5 CMA
REIT Trustees 2 CMA
Collective Investment Schemes 18 CMA
Pension Sub-sector
Fund managers 16 RBA
Administrators 31 RBA
Custodians 10 RBA
Sources: Compiled by the Author based on annual regulators reports
6|Page
2.2.2 Assets Held by the Subsectors
The assets held by the various financial subsectors continue to grow over the years as shown
in the figure below;
Figure 5: Assets Held by Players in the Financial Services Sector
Assets of Financial Services Sector
4,500,000
4,000,000
3,500,000
KShs 'million
3,000,000
Saccos
2,500,000
2,000,000 Insurance
1,500,000 Pension
1,000,000
Banking
500,000
0
2010 2011 2012 2013
Year
Source: Compiled by the author from annual Financial Sector Stability Reports
Banks constitutes the biggest share of total assets with an average of 66%, followed by the
Pension subsector at 16% and Insurance and Saccos accounting for 9% each.
2.3 Overview of the Sacco Subsector

2.3.1 Background
According to the Financial Sector Regulators (2012) Saccos have continued to play a critical
role in Kenyas financial sector in terms of access, savings mobilization and wealth creation.
Representing a considerable part of the Kenya financial sector, Sacco societies are member-
based organizations focusing on meeting financial needs of members for personal and
enterprise development.
Membership cuts across different economic activities, both in rural and urban areas. The
Saccos are engaged either in Back Office Savings Activities (BOSAs) or the Front Office
Savings Activities (FOSAs), or both. The Sacco societies operating FOSAs reflect near retail
banking business operations. These deposit taking Saccos pose additional risks and are
therefore subject to closer regulation and supervision.
The Sacco Societies Act, 2008 and Sacco Societies (Deposit-Taking Sacco Business)
Regulations, 2010 provide legal, regulatory and supervisory framework commensurate to the
risks in deposit taking business of Saccos. The Sacco Societies Regulatory Authority
(SASRA) is mandated under this Act of parliament, to license, regulate and supervise Sacco
7|Page
societies. Thus the DTS are under the regulation and supervision of SASRA. Other SACCOs
(unable to meet SASRA regulatory compliance requirements) are under the supervision of
Commissioner for Cooperative Development. Nonetheless all the SACCOs including those
regulated by SASRA must be registered by the commissioner. SACCOs play a key role in
promoting financial inclusivity and access. According to FSD Kenya (2013) access to
financial services was as follows; Bank, 29.2% SACCO 10%, Microfinance Institution
(MFI), 3.5%, Informal group 27.7% and Mobile Financial Service Provider (MSFP) at
61.6%.
2.3.2 Performance of the Sacco Subsector 2013

The subsector performed well recording double digit growth rates in all metrics assessed as
shown in the table below;
Table 2: Performance of the Sacco Subsector in 2013
MEASURE 2013 2012 CHANGE (%)

Number of Saccos 1,995 1,989 0
Membership 3,294,829 2,968,688 10.9
Total Assets (KShs) 335,436,856,311 293,826,703,786 14.2
Member Deposits (KShs) 240,805,097,772 213,079,983,639 13.0
Loans and Advances (KShs) 251,878,980,092 221,554,214,917 13.7
Total Capital (KShs) 25,296,642,787 21,323,641,429 18.6
Turnover (KShs) 43,271,424,815 37,286,448,460 16.1
Source: Sacco Supervision Annual Report, 2013
The 215 DTS account for 78.0% and 77.1% of the assets and deposits for the Sacco subsector
respectively. The 135 licensed DTS account for 92.4% and 92.9% of the assets and deposits
of the 215 DTS respectively and this translates to 72.0% and 71.6% of the assets and deposits
for the Sacco subsector (SASRA, 2014).
This depicts the higher competitiveness of the DTS in attracting members and deposit. This
can be attributed to new business models which offer members an array of financial services.
As well enhanced regulation by SASRA reduces the DTS credibility challenges thus
increasing consumer confidence. The performance of DTS is shown in the table below;
Table 3: Performance of the Deposit Taking Saccos in 2013
Performance 135 Licensed DTS 215 DTS 1,995 Saccos

Indicator
Membership 2,612,250 2,822,553 3,294,829
Assets 241,621,964,970 261,586,510,112 335,436,856,311
Deposits 172,526,183,751 185,787,909,090 240,805,097,772
Loans and Advances 184,538,572,411 196,857,599,555 251,878,980,092
Source: Sacco Supervision Annual Report, 2013; Figures in KShs
8|Page
2.3.3 Key Trends in the Saccos Subsector
i. Saccos are becoming more and more bank like in terms of activities and products. As
a result Sacco clients are demanding nearly the same services as they are used
expecting from a bank such as cheque clearing, RTGS, ATMs etc. This is forcing
Saccos to contemplate acquiring banks or converting to banks
ii. Saccos through FOSA are becoming more open in terms of membership thus breaking
the concept of the common bond. Consequently the guarantee mechanism dependent
on social collateral is being undermined
iii. Enhanced scrutiny and regulation is helping increase transparency and accountability
and thus raise the confidence of members and potential clients. This is likely to see an
increase in contribution of Saccos to the economy
iv. Increased formalization of the subsector and integration with the other subsectors.
This will increase the need for Saccos to be included in the national payment system,
credit referencing system and a centralized external financing mechanism
v. Subsequent to the above, competition between Saccos and other financial institutions
is will remain intense. This will call for innovation among Saccos while at the same
time requiring the regulator to be more responsive, vigilant and robust
2.3.4 Comparison of the Kenya Sacco Subsector with other Countries

According to the World Council of Credit Unions (2014) Kenya is ranked first in Africa in
terms of various metrics such as members, savings & shares, loans, reserves and assets.
Further analysis shows that Kenya accounts for a huge proportion of Africas Saccos
movement. It accounts for 22% of all credit unions, 28% of the membership and 54% of all
savings and shares. It also accounts for 63% of loans, 55% of reserves and 62% of all assets
held by the African Saccos. This is shown in the figure below;
Figure 6: Kenyas Proportionate Contribution to Africa Sacco Subsector
Kenya's Proportion of Africa Sacco Subsector

Assets 62%
Reserves 55%
Loans 63%
Savings and Shares 54%
Members 28%
Credit Unions 22%
0% 20% 40% 60% 80% 100%

Kenya Others African Countries
Sources: Data by World Council of Credit Unions2 Analysis and Illustration by Author
2
World Council of Credit Unions is the global trade association and development agency for credit unions and
financial cooperatives.
9|Page
2.4 Overview of Micro, Small and Medium Enterprises (MSMEs)
The Micro Small and Medium Enterprises sector plays critical role in the Kenyan economy.
This is especially so as far as creation of employment is concerned. According to Kenya
National Bureau of Statistics (2014) the informal sector constituted 89.7 per cent of total
employment in 2013. This can be attributed mainly to the micro-enterprises most of which
are informal in nature.
It is in view of MSMEs critical role that the Micro and Small Enterprises Act, 2012 was
enacted with the following objectives;
i. providing an enabling business environment;
ii. facilitating access to business development services by micro and small enterprises;
iii. facilitating formalization and upgrading of informal micro and small enterprises;
iv. promoting an entrepreneurial culture; and
v. promote representative associations
Due to their size and often informal nature MSMEs face many financial challenges. A paper
prepared by Capital Markets Authority identified some of the financial access challenges for
MSMEs to include the following; difficulty in employing competent people with techniques
in financial management because of the salaries such people would demand, financial
problems arising from late payments by debtors, and inability to raise own finance and access
financial services from formal sources. Furthermore, most are unable to meet the strict
financial requirements posed by banks (CMA, 2010).
The enterprises also suffer a myriad of other challenges that constraints their growth. Many
MSMEs employ less than 5 people, mostly family members who are usually not legally
registered, apply simple and relatively rudimentary technology in production and, therefore,
the quality of their products is likely to be poor. They may suffer from limited market access
and fierce competition from many rival producers.
This category of MSMEs usually does not have proper physical structures such as premises
from which to operate business, accessible roads and other essential utilities, which are major
catalysts to accessing formal sector credit. In addition, there is a general lack of
professionalism within this category of enterprises in terms of strategic planning procedures,
decision-making processes and business planning, and management in general.
In view of the critical role played by the MSMEs in the economy and further considering
their challenges in accessing finances there is need to scale up the financing of MSMEs by
institutions such as Saccos. This survey thus looks at the interactions of MSMEs with Saccos
in accessing funding and financial services and explores the challenges encountered and what
needs to be done to enhance the situation.
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3 CHAPTER THREE: FINANCING OF MSMES BY SACCOS
3.1 Introduction
This section deals with how Saccos provide funds to MSMEs. The size of loan portfolio
currently committed to MSMEs and the characteristics of such lending. It also looks at the
sources of funds available for MSME lending and explores ways in which the volume of the
funds can be scaled up.
3.2 Extent of MSMEs Financing by Saccos

3.2.1 Availability of MSMEs Loans
Majority of the Saccos at 63.7% had loan products targeted at MSMEs while 36.3% did not
have such products. This is shown in the figure below;
Figure 7: Availability of MSME Loans in Saccos
Do you have loan products targeted at micro, small and medium

enterprises?
36.28%
Yes
No
63.72%
Sources: SASRA Saccos-MSMEs Survey 2014
This is an encouraging outcome since majority of Saccos have products for MSMEs. This is
likely to rise as more Saccos adopt a bolder commercial orientation unlike the traditional
social orientation. Nonetheless as seen later in this report the Saccos need to diversify their
business finance products and services to accord with the needs of MSMEs.
3.2.2 Percent of Loan Portfolio Disbursed to MSMEs

Despite the high percentage of the Saccos having MSME loan products the situation is not as
encouraging when it comes to the percentage of the portfolio currently lent to MSMEs. A
huge portion of the lent funds i.e. 64.1% is currently disbursed to non business customers
while 35.9% is disbursed to business customers. This is shown in the figure below;
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Figure 8: Percent of Loan Portfolio Disbursed to MSMEs
Going by the performance in 2013 the above figures can be analysed as in the table below;
Table 4: Extent of Sacco Lending to MSMEs
Item Value
Total Loans and Advances by 215 DTs 196,857,599,555
Percent allocated to business borrowers 36%
Percent allocated to non-business borrowers 64%
Amount allocated to business borrowers 70,716,447,685.54
Amount allocated to non-business borrowers 126,141,151,869.46
Sources: SASRA Saccos-MSMEs Survey 2014. Amounts in Kenya Shillings
The above figures show that at least KShs 70.7 billion was lent to businesses by Saccos in
2013. This does not compare well with banks which had in the same duration lent up to KShs
1.2 trillion. However this is to be seen in the light of the limited deposit mobilization options
hitherto available to Saccos. Going forward this is expected to change as Saccos now have
access to FOSA deposits which will improve their deposit volumes and in future the size of
funds available for business lending. The table below shows the volume of business lending
by banks as at 31st December 2013.
Table 5: Lending to Businesses by Banks as at 31st December 2014
Banks Lending as at 31st Dec 2013 Amount (KShs billion)

Total Available to Private sector 1,541.74
Less Private households (230.01)
Less Consumer durables (94.67)
Total available to businesses 1,217.06
Sources: Financial Sector Regulators Forum. (2014). Further Analysis by Author
12 | P a g e
3.3 Expanding Lending to MSMEs
3.3.1 Willingness to Scale up MSME Lending
A significant majority of the respondents Saccos would be willing to expand their lending to
MSMEs at 67% while 8% were unwilling. A further 25% did not respond to the question.
This is shown in the figure below;
Figure 9: Willingness to Scale up Lending to MSMEs
Would you be willing to increase the percentage of your lending

capacity available to MSMEs in the future?
25%
Yes
No
8%
67% No response
The high non-response is due to the fact that 36% didnt have MSME loan products and may
not be willing to commit on this due to lack of experience in dealing with the sector.
3.3.2 Sources of Funds for MSME Lending

The major source of funds used for lending is member contributions/savings at 76%. Other
internal sources include non-withdrawable deposits at 6%, Fosa deposits at 2% and other
Sacco income at 3%. Thus internal sources of funds account for 87% while the other 13% is
accounted for by external sources such as loans. This is shown in the figure below;
Figure 10: Sources of Funds for MSME Lending
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The issue of increasing lending to MSMEs is tied to sources of funds available for lending.
Thus Saccos need to be assisted to expand sources of funds. While access to external sources
poses many compliance risks access to internal sources especially in view of FOSA regime
can be scaled up with less challenges.
However there are other less risky sources of external funds such as government funds. In
view of devolved government Saccos can work with county governments to strengthen their
kitty and lend more to businesses. Some counties such as Kiambu have set aside funds for
lending to businesses. Since the government lacks the infrastructure and manpower for such
lending Saccos should explore the opportunities to participate in such business funds.
3.3.3 Availability of Untapped Sources of Funds

Majority of the Saccos at 60% have other sources of funds they would like to tap into and are
currently unable to. A further 25% responded negatively to the question while 15% did not
respond. This is shown in the figure below;
Figure 11: Availability of Untapped Sources of Funds
Are there other sources of funds you would like to utilize but
are currently not able to?
15%
Yes
No
25%
60% No response
This shows Saccos are yet to ascend to full potential as far accessing the broad range of
financial sources available. They therefore require regulatory and administrative support to
access such sources.
3.3.4 Preferred Extra Sources of External Funds

The most preferred sources of external funds are government funds at 65% followed by
donors and international lenders at 32% and borrowing as per SASRA regulations at 14%.
Others are capital markets at 8% and fixed deposits at 6%. These and others are shown in the
figure below;
14 | P a g e
Figure 12: Preferred Alternative Sources of Funds for MSME Lending
Preferred Alternative Sources of Funds for MSME Lending
Funding from SASRA 2%
Coop holding deposit 3%
Fixed deposits (members and others) 6%
Capital markets e.g. bonds 8%
Borrowing as per SASRA regulations 14%
Donors and international lenders 32%
Government Funds e.g. Uwezo fund 65%
0% 20% 40% 60% 80%

Percent Responding
3.3.5 Challenges Encountered in Accessing Alternative Sources of Funds

Saccos in seeking alternative funding sources face a number of challenges key amongst them
being strict requirements/bureaucracy at 33%, inadequate government support at 29% and
legal restrictions/SASRA regulations at 21%. Other challenges are lack of information on
alternative sources at 17% and high interest rates at 12%. These and other challenges are
shown in the figure below;
Figure 13: Challenges in Accessing Alternative Sources of Funding
Challenges in Accessing Alternative Funding
Forex fluctuations 3%
Lack of adequate collateral 8%
Poor perception of SACCOs 11%
High interest rates 12%
Lack of information on sources of funds 17%
Legal restriction/SASRA regulations 21%
Inadequate government support 29%
Strict requirements/bureaucracy 33%
0% 10% 20% 30% 40%

Percent Responding
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3.3.6 Support Needed by Saccos in Accessing Alternative Sources of Funds
Regarding suggestions on support to enhance access to more funds key suggestions include
government funding and support at 35%, enhancement of member education at 32% and
provision of information and linkages with creditors at 21%. Others are clarifying laws and
relaxing restrictions at 17% and easing process of accessing such funds at 15%. These and
more suggestions are as shown in the figure below;
Figure 14: Support Needed by Saccos to Access more Funding for Lending to MSMEs
Support Needed to Access More Funding
Allow access to capital markets (NSE) 3%

Reduce taxes on FOSA income 5%
Provide guarantees for international borrowing 6%
Donor support/Grants 9%
Provide access to cheaper funds 12%
Reduce interest rates 14%
Centralised lender dedicated to SACCOs 14%
Ease process of accessing such funds 15%
Clarify laws and relax restrictions 17%
Provide information and linkages with creditors 21%
Enhance member education e.g. joint marketing 32%
Government funding and support 35%
0% 10% 20% 30% 40%

Percent Responding
3.4 Characteristics of MSME Lending by Saccos

3.4.1 Key Characteristics of MSME Loans
The table below highlights some of the characteristics of MSME loans offered by Saccos.
Table 6: Characteristics of MSME Lending by Saccos
Item Value
Average Upper Limit KShs 8,061,190.00
Average Duration 29 months
Average Interest Rate 15 percent
This further highlights the need for Saccos to access more funds in order to raise the caps on
the loans and also lend for longer durations. Strict limitations on amount and durations may
make MSMEs shy away from approaching Saccos for loans. Some of these issues are raise
don the section dealing with challenges MSMEs face in seeking funding from Saccos.
16 | P a g e
3.4.2 Perceptions on Repayment by MSMEs
Regarding perceptions on repayment rate 2% of the respondents view it as excellent, 30% as
very good and 51% as good. This shows that 83% of the respondents perceive the repayment
rate positively. A further 16% perceive it as fair while 1% perceives it as poor. This is shown
in the figure below;
Figure 15: Perception on Repayment Rate of MSME Loans
How would you rate repayment rate for MSME loans?

2%
16%
30% Excellent
Fair
Good
1% Poor
Very Good
51%
While these are perceptions and do not represent the exact repayment rate in terms of
percentages the positive perceptions debunks the perceptions by some Saccos that lending to
MSMEs carries excess default risks.
Saccos should therefore be encouraged to lend to MSMEs since fears of default risk arent
substantiated by experience. MSME lending may also be more profitable in view of the
higher interest rate charged compared with loans to the salaried members.
3.4.3 Disaggregation of MSME Loans

Most of the Saccos are unable to disaggregate the loans by various categories. There is need
for SASRA to encourage such disaggregation as it will be critical in issuing prudential
guidelines as far as lending to MSMEs is concerned. The table below shows the ability of
Saccos to disaggregate MSME loans by various criteria.
Table 7: Ability to Disaggregate Loans by Given Business Criteria
% that can disaggregate by business % that can disaggregate by

Response type business size
Yes 34% 29%
No 43% 42%
No response 23% 29%
100% 100%
17 | P a g e
Majority of the loans availed to MSMEs are issued to micro enterprises at 29% and small
enterprises at 40%. Thus micro and small enterprises account for 69% of such lending with
the balance being accounted for by medium enterprises at 22% and large enterprises at 9%.
Figure 16: Disaggregation of MSME Loans by Enterprise Categories
How would you disaggregate your business lending by

9% enterprise categories?
29%
22%
Micro Enterprises
Small Enterprises
Medium Enterprises
Large Enterprises
40%
3.5 Use of Development Loans for Business Purposes

Regarding the use of development loans for business purposes 10% think that development
loans are to a very large extent used for business, 53% to a large extent, 25% to a small extent
and 5% to a very small extent while 7% did not respond. This is shown in the figure below;
Figure 17: Extent to Which Development Loans are Used for Business Purposes
To what extent do you think development loans are used for

business related purpose
5% 7%
10% To a large extent
To a small extent
53% To a very large extent
To a very small extent
25%
No response
This shows that apart from direct business lending Saccos also contribute indirectly to
business financing through development loans. It will be important in future for SASRA to
enhance reporting and disclosure to ensure that whenever development loans are applied to
business purposes proper classification is done. This will ensure that the full extent to which
Saccos finance MSMEs is established.
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4 CHAPTER FOUR: ACCESS TO SACCO FUNDS BY
MSMES
4.1 Introduction
This chapter deals with how MSMEs access funding from Saccos, how such funds are
utilized and reasons why the MSMEs prefer Saccos as compared to other financial
institutions. It also deals with other aspects of the borrowing such as mechanism used in
securing the borrowed funds. Understanding the salient features underlining MSME
borrowing from Saccos is useful for SASRAs development of regulatory environment and
for other Saccos currently developing MSME loan products.
4.2 Characteristics of Respondent Enterprises

4.2.1 Duration of Time in Business
Majority of the respondents had been in business for a long enough period of time with 61%
having been in business for more than 5 years and 29% for less than 5 years while 10% didnt
Figure 18: Respondents Duration in Business
How long have you been in business?

10%
29%
Less than 5 yrs

More than 5 yrs
No response
61%
Considering that majority of MSMEs do not live to see their 5th birthday it is noteworthy that
longevity of the respondent in business adds weight to their responses. It can be expected that
with lengthy business experience the respondents are in a better position to offer useful
insights.
4.2.2 Type of Business Engaged In

Majority of the respondents were in the trade and hospitality services at 42.07%, a further
32.32% were in agriculture, 14.23% were in other services such as beauty, professionals,
repair etc while 7.32% were in transport. The real estate had 5.69% of the respondents
involved in it. These and other business types engaged in are shown below;
19 | P a g e
Figure 19: Type of Business the Respondents are Engaged in
What type of business are you involved in?

Mining and quarrying 0.20%
Electricity and water 0.20%
Manufacturing 0.41%
Communication 1.42%
Financial services e.g. agent 2.64%
Construction 3.05%
Real estate 5.69%
Transport 7.32%
Services (beauty, professional, repairs etc) 14.23%
Agriculture 32.32%
Wholesale/retail trade, restaurant/hotels 42.07%
0% 10% 20% 30% 40% 50%

Percent responding
This reinforces the fact that MSMEs are more likely to operate in sectors with lower barriers
of entry in view of the challenges earlier discussed. As such Saccos developing MSMEs
products should pay more attention to these sectors and the inherent characteristics that drive
and inform the need for various types of financial services. For instance some sectors such as
retail are more inclined to seeking working capital while others such as manufacturing and
even farming are likely to manifest capital expenditure needs.
4.2.3 Sacco Membership

All the respondents interviewed were Sacco members with 66% having been members for
more than 5 years, 32% for less than 5 years while 2% didnt respond to the question. This is
Figure 20: Duration of the Respondents Sacco Membership
For how long have you been a member of the SACCO?

2%
32%
66%
Less than 5 years More than 5 years No response
20 | P a g e
The respondent had been in the Saccos long enough for them to make meaningful
contribution in the survey. Their views therefore carry substantial weight.
4.2.4 Factors Motivating Sacco Membership

The key factor motivating MSMEs to join Saccos include; to borrow from the Sacco at 40%,
to develop a saving culture at 28% and low interest rates at 24%. Others are social economic
benefits at 14% and quick, efficient service at 12%. These and more are shown below;
Figure 21: Factors Motivating MSMEs to Join Saccos
What factors motivated you to join the SACCO as a businessperson?
Affordable charges 1.4%

Favourable repayment terms 2%
Proximity to the SACCO 2%
Easy borrowing process 5%
High interest on deposits (dividend) 5%
To grow my business 6%
Quick, efficient service 12%
Social economic benefits 14%
Low interest rates 24%
Develop saving culture 28%
To borrow from the SACCO 40%
0% 10% 20% 30% 40% 50%
Percent Responding
Considering that borrowing is a key motivating factor for MSMEs Saccos keen on serving
this market segment require adequate sources of funds to meet the demand. Therefore
promoting of MSMEs lending by Saccos must go hand in hand with promoting mobilization
of funds both from internal and external sources.
Saccos also play a crucial role in encouraging a saving culture among MSMEs. This is crucial
considering our low savings to GDP ratios. Regarding expectation of low interest rates it is
important for Saccos serving MSMEs to maintain this competitive advantage. This will
require access to cheap sources of funds. A situation where Saccos lending to MSMEs opt to
levy high interest rates might dampen demand for Sacco loans by MSMEs.
4.3 Current Access to Financial Services

The respondents had access to various financial services during the previous business year
with access to Sacco being the highest at 97%, banks at 66% and mobile financial services at
45%. Other key financial services used included borrowing from individuals at 24% and
informal groups at 17%. These are shown in the figure below;
21 | P a g e
Figure 22: Access to Financial Services
Which of the following services have you used in the last one year?
Micro finance institution 8%

Pension e.g. NSSF, Mbao pension etc 9%
Insurance company e.g. NHIF 13%
Informal group e.g. chama/ROSCA 17%
Borrowing from individuals 24%
Mobile Financial Service e.g. M-pesa 46%
Bank 66%
SACCO 97%
0% 20% 40% 60% 80% 100%

Percent Responding
The MSMEs have a higher than average access to financial services when compared with the
results of FinAccess National Survey 2013. The lower than expected percentage attributed to
mobile financial services can be explained by the fact that most of the respondents assumed
that the use is in line with business purposes as opposed to other personal use. MSMEs with
Sacco membership utilize the Sacco services more compared to other financial services.
4.4 Borrowing from Saccos by MSMEs

Since joining the Sacco majority of the respondents had at one point or other taken a business
loan. This constitutes 91% of the respondents, 6% hadnt taken business loans while 3%
didnt respond to the question. This is shown in the figure below;
Figure 23: Past Borrowing from Sacco for Business Purpose
Since joining the SACCO have you ever taken a loan for
business purposes?
6% 3%
Yes
No
No response
91%
This by any standards is a huge percentage. This presents both challenges and opportunities.
It shows there is high demand for loans which is a good thing. However it also means that
Saccos serving MSMEs need to have sufficient fund to meet demand else the ensuing
22 | P a g e
customer dissatisfaction may undermine the Saccos future success. This is more so for Saccos
adopting a purely commercial approach thus lacking the constant inflows from salaries.
4.4.1 Security Mechanisms Used in Borrowing by MSMEs

The most common methods of guaranteeing the loans are guarantors at 81%, salary at 16%
and collateral at 14%. Other guaranteeing mechanisms were utilized by 8% of the borrowers.
Figure 24: Security Mechanisms Utilized by MSMEs in Borrowing from Saccos
If you have taken a business loan from the SACCO how did you
guarantee the loan?
100% 81%
Percent responding
50%
16% 14% 8%
0%
Guarantors Salary Collateral e.g. Other
logbook or title
As expected use of guarantors is the most common type of security. This poses a challenge
for Saccos with less common bond since the borrowers will have challenges getting
guarantors. Such Saccos will need to utilize collateral based lending. Considering that Saccos
lack experience in such many challenges are expected as will be seen later in the report.
This issue of security is critical and SASRA needs to look into it critically with purposes of
eliminating unnecessary restrictions and building capacity of Saccos to lend on the basis of
diverse loan security mechanisms. This will require working hard to change Saccos
mentality and to array fears of default risks and difficulties in realizing security in the event
of default. Saccos capacity to improve lending mechanisms to MSMEs can be enhanced
further through policy guidelines on MSMEs lending.
4.4.2 Purpose of Borrowing

Key reasons for borrowing the funds include business expansion at 34%, cash flow
enhancement at 28% and buying of business assets at 16%. These and other purposes are
illustrated in the figure below;
23 | P a g e
Figure 25: Purpose of Borrowing from Saccos by MSMEs
What was the purpose of borrowing the money for the business in
your latest borrowing?
Building or refurbishment of premises 8%
Capital to start a business 8%
Other purposes 13%
Buying business assets 16%
Enhance cashflow 28%
Business expansion 34%
0% 10% 20% 30% 40%

Percent Responding
These purposes of borrowing are key to development of loan products for MSMEs by Saccos.
Need for funds to expand business for instance points to demand for substantial amounts and
for longer repayment duration.
On the other hand cash flow enhancement points to needs for short term borrowing such as
overdraft. It also points to a need for trade finance products such as LPO financing, bid
bonds, letter of credit guarantees and such like. Furthermore, preference for borrowing to buy
assets points to a need for asset financing products.
Also the purpose of borrowing is somehow related to the age of the enterprise. Since most of
the respondents had been in business for more than 5 years preference for expansion funds is
to be expected. Businesses at growth stages also require a lot of cash flow support.
4.4.3 Reasons for Preferring to Borrow from Saccos

The main reason for preferring Saccos is low interest rates at 71% followed by favourable
terms and conditions at 16% and easy security options at 13%. Others are quick loan
processing time and Saccos being more friendly/understanding each at 11%. This is shown in
the figure below;
24 | P a g e
Figure 26: Reasons for Preferring to Borrow from Saccos
Reasons for Preferring Saccos to other Lenders

Interest rate is constant 2%
It is the only option I have 3%
Dividend paid on savings 3%
Members have a say in SACCO affairs 5%
SACCO is more understanding/friendly 11%
Loan processing time is quick 11%
Easy collateral/I have shares 13%
Favourable terms and conditions 16%
Low interest rates 71%
0% 20% 40% 60% 80%

Percent Responding
Once again much value is attached to low interest rates. Thus the interest rates are at the core
of the competitiveness of Saccos. Saccos need to maintain and strengthen these
characteristics that make them more preferable. Thus, even as Saccos become more bank-like
they should be advised not to compromise the factors upon which their competitiveness is
anchored. Such compromise would result in Saccos losing appeal and with it ability to
mobilize deposits thus threatening their success and even existence.
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5 CHAPTER FIVE: PROVISION OF BUSINESS FINANCE
SERVICES BY SACCOS
5.1 Introduction
Saccos do not just provide MSMEs with loans but also with other essential business services.
Due to the influence of FOSA activities MSMEs are demanding more from Saccos. As
Saccos operate more and more like banks expectations are increasingly raised. MSMEs now
expect to be served in more or less the same way in a Sacco as happens in traditional banks.
Considering that the option of Saccos converting into banks may result in the loss of the core
principles that define Saccos and undermine the movement there is need to bridge the gaps as
far as these expectations are concerned. This section explores the non-lending services
available to MSMEs in order to expose any gaps and provide the stakeholders with a starting
point in charting the way forward.
5.2 Availability of Business Finance Services by Saccos

5.2.1 Availability of Core Business Finance Products
The provision of business finance services is relatively low in Saccos. The common services
are asset financing and cheque discounting each at 46%. Others are overdraft facilities at 45%
and insurance premium financing at 32%. The availability of other services is shown below;
Figure 27: Availability of Core Business Finance Services by Saccos
Business finance products provided to MSMEs by Saccos
Letter of credit, guarantee and bid bonds 17%
Invoice discounting 17%
LPO finance 24%
Insurance premium financing 32%
Overdraft 45%
Cheque discounting 46%
Asset finance 46%
0% 20% 40% 60% 80% 100%
Yes No No response
The Saccos need to scale up the availability of financial services to serve MSMEs better and
also manage competition from other financial institutions.
26 | P a g e
5.2.2 Availability of Other Business Finance Products
Other business essential financial services available include cheque deposit at 81%, access to
ATM at 71% and insurance products at 42%. Availability of other services is as shown in the
figure below;
Figure 28: Availability of Other Financial Services
Provision of business essential services to MSMEs

Cheque deposit 81%
Access to ATM 71%
Insurance products 42%
Pension products 31%
Cheque book 30%
Investment products 29%
0% 20% 40% 60% 80% 100%

Yes No No response
Provision of basic services such as cheque books and ATM access are critical for MSMEs.
Saccos not currently offering such services should be encouraged and supported to roll them
out. This will boost their competitiveness in service delivery. They also need to explore
opportunities to offer a broad range of financial services that would be of interest to MSMEs.
5.3 Willingness to Offer More Business Finance Services

Majority of the Saccos would be willing to offer more financial services. Up to 68%
responded positively as far as this is concerned, 20% responded negatively while 12% didnt
Figure 29: Willingness by Saccos to Offer More Business Finance Services
Are there any business finance products you would

like to offer but are not currently able to offer?
12%
20%
68%
Yes No No response
27 | P a g e
Majority of the Saccos are willing to expand their product offering. This augurs well for the
future of the subsector since it is a pointer to growth orientation. Saccos need to explore the
opportunities provided by the more organised and better regulated business environment.
5.4 Business Services Saccos are Willing to Offer in the Future

Some of the business finance services Saccos are desirous to offer include asset finance at
29%, business loans and mortgage each at 17% and cheque clearance/deposit at 15%. Others
are trade financing, insurance premium financing and forex each at 8%. Other services are as
Figure 30: Business Finance Services Saccos are willing to Offer in the Future
Other service or products Saccos would wish to offer to MSMEs

Cheque books 3%
FOSA/collateral Loans 3%
Mobile banking 4%
International transfers 4%
Investment products 4%
Group loans 4%
Overdraft 5%
ATM Access 5%
Forex 8%
Insurance Premium Financing 8%
Trade financing e.g. Invoice discounting 8%
Cheque deposit/clearance 15%
Mortgage 17%
Business loans 17%
Asset finance 29%
0% 10% 20% 30%

Percent Responding
The services the Saccos are willing to offer are critical to MSMEs. Offering such services
will make Saccos compete more effectively with other players in the MSME financing
business. There is need to ensure that the existing legal and regulatory framework does not
constraint Saccos from offering such services. Where the laws are silent Saccos should be
bold to lead legislation and regulation. Where laws are restrictive the regulator should work
with stakeholders to review such laws.
5.5 Support Saccos Need to Offer more Business Finance Services

The key support needs include capacity building at 40%, access to more/cheaper funds at
39%, clear/flexible legal framework at 20% and government support also at 20%. These and
more are as shown in the figure below;
28 | P a g e
Figure 31: Support Saccos need to offer More Business Services
Support Saccos need to offer more services to MSMEs

Be allowed access to capital markets 1%
Be allowed to use more guarantee methods 3%
Access to borrower credit information 3%
Data/research on funding MSMEs 4%
Access to National Payment System 4%
Government support 20%
Clear/flexible legal framework 20%
More/cheaper funding 39%
Capacity building 40%
0% 10% 20% 30% 40%

Percent Responding
Saccos need capacity building to improve their ability to offer services to MSMEs. This is
mainly in terms of being assisted to understand the sector and being equiped with training on
how to handle MSMEs. Saccos also need capacity enhancement through peer learning from
others that have succeeded in MSME lending and in receiving research and statistics to guide
them. Since the issue of clarity of legal framework may not be about the laws but how they
are understood civic education among Sacco actors is needed.
5.6 Access to Financial Services Via Mobile Phone

5.6.1 Ability to Access Services
Use of mobile phones to access financial services has revolutionized the way business is done
in Kenya. For Saccos to serve the MSMEs better they need to facilitate such access. Up to
45% of the respondents were able to access services via the phone while 50% were not and
5% didnt respond to the question. This is shown in the figure below;
Figure 32: Ability to Access Services Using Mobile Phone
Are you able to access any financial services from your

SACCO through your mobile phone?
5%
45%
50%
Yes No No response
29 | P a g e
It is good that a significant number are able to use mobile phones to access services. This
should be scaled up as it will save Saccos costs and allow them to serve more people across
expansive geographical areas.
5.6.2 Services Available

Services commonly available via the phone include deposits/withdrawals at 58%, checking
balance at 17%, access to statement and loan repayment each at 13% and mobile
alerts/notifications at 9%. These and others are shown in the figure below;
Figure 33: Financial Services Available to MSMEs via Mobile Phone
What financial services are you able to access from the

SACCO through your mobile phone?
Transfer funds to others 4%
Spot cash 5%
Bill payment/Airtime purchase 5%
Mobile alerts/notifications 9%
Loan repayment 13%
Access statement 13%
Check balance 17%
Withdraw or deposit money 58%
0% 20% 40% 60% 80%

Percent Responding
The Sacco clients are able to access many services through the mobile phone. This widens
and deepens financial access and improves convenience. It also ensures Saccos can compete
effectively with banks which provide similar services. As well, it improves Saccos
profitability as costs are reduced. However, not all the Saccos have the infrastructure to
support the provision of such services. Such Saccos need to be assisted to build the requisite
technical capacity since their viability may be threatened by failure to provide the
conveniences of mobile banking.
30 | P a g e
6 CHAPTER SIX: CHALLENGES OF MSME FINANCING
BY SACCOS
6.1 Introduction
Both MSMEs and Saccos encounter various challenges in their business relationship.
Understanding these challenges is key to their resolution. Both SASRA and stakeholders in
the Sacco sector need to look into ways of eradicating or minimizing these challenges. Apart
from citing the challenges the respondents also provide suggestions on how these challenges
can be addressed.
From a regulatory perspective it is important to look into issues that can be addressed by
tinkering with the regulatory regime to make it friendlier to MSMEs financing. Other issues
require a multisectoral approach and the regulator, umbrella bodies and all stake holders need
to come together and determine the way forward.
6.2 Challenges Faced by Saccos in Offering Services to MSMEs

The key challenges encountered by Saccos while offering services to MSMEs include default
risks/poor repayment at 51%, inadequate funds to lend at 38% and securing loans i.e.
guarantors/collateral at 23%. Others are lack of proper legal framework at 23% and
difficulties in evaluating the MSMEs at 21%. Other challenges are as shown in the figure
below;
Figure 34: Challenges Faced by Saccos in Servicing MSMEs
Challenges faced by Saccos in offering services to MSMEs
No access to credit information/referencing 7%

Disposal of collateral e.g. legal issues 11%
Dishonesty by the business onwers 13%
Lack of awareness among customers 13%
Irregular/prolonged repayment 14%
MSMEs not well managed 17%
Competition from other financial institutions 20%
Evaluating them is difficult/costly 21%
Lack of proper legal framework 23%
Securing the loans i.e. guarantors 37%
Inadequate funds to lend 38%
Default risks/Poor repayments 51%
0% 20% 40% 60%

Percent Responding
31 | P a g e
6.3 Support Needed by Saccos to Overcome Challenges Faced while Serving
MSMEs
In view of the above challenges the Saccos made suggestions on how they can be empowered
to overcome. The key suggestions are capacity building and expanding sources of external
funds each at 30% and making the legal framework flexible and clear at 23%. Other
suggestions are education of members on use of funds at 20% and access to full credit
information from CRBs at 15%. The other suggestions are as shown in the figure below;
Figure 35: Support Needed by Saccos to Overcome Challenges in Serving MSMEs
Support Needed by Saccos to Overcome Challenges Encountered in

Serving MSMEs
Reduction of taxation 1%
Support in improving ICT systems 3%
Fast-track dispute resolution in Coop Tribunal 3%
Business development services to MSMEs 4%
Create awaress on SASRA to boost confidence 6%
Ease realisation of collateral upon default 6%
Lower bank lending rates 8%
Prudential guidelines on MSME lending 10%
Access to full credit information from CRBs 15%
Education of members on use of funds 20%
Flexible and clear legal framework 23%
Expand sources of external funds 30%
Capacity building e.g. training 30%
0% 10% 20% 30%

Percent Responding
32 | P a g e
6.4 Challenges Faced by MSMEs in Accessing Services from Sacccos
The key challenges faced by the MSMEs in accessing services from the Saccos include delay
in processing loan request at 31%, limitation in amount of money that can be borrowed at
29% and getting guarantors for a loan at 24%. Others are poor service at 12% and repayment
period being too short at 8%. Other challenges are shown in the figure below;
Figure 36: Challenges Faced by MSMEs while Accessing Services from Saccos
What challenges have you faced in accessing financial services for

you business from SACCOs?
Only one long term loan at a time 2%
Low/delayed dividend 2%
Refusing to accept collateral 2%
Difficulties in repayment 2%
Corruption, nepotism, tribalism 2%
High interest rates 3%
Bureaucratic borrowing process 3%
Lack of some products and services 3%
Incompetent staff 4%
Lack of collateral 6%
Repayment period too short 8%
Poor service 12%
Getting guarantors for a loan 24%
Limited amount that can be borrowed 29%
Delay in processing request 31%
0% 10% 20% 30% 40%

Percent Responding
The following challenges were also reported by less than 2% of the respondents
i. Defaulting guarantors
ii. High loan processing fees
iii. Change of interest rates
iv. No business loans
v. Accessibility of the Sacco
vi. Not recognized as a legitimate bank account e.g. NSE
vii. Forced to join FOSA
6.5 Analysis, Summary and Conclusions

The challenges encountered in offering services to MSMEs are summarized into key points
as follows;
i. Most of the challenges revolve around Saccos lending capacity which causes issues
such as delays in disbursing loans, limitation of amounts and shortening of the loan
duration. Supporting Saccos to access external funds is critical in resolving this. Also
Saccos can have their capacity build to mobilize deposits
33 | P a g e
ii. The legal framework requires to be reviewed to align with the challenges and risks of
lending to MSMEs
iii. The capacity of MSME needs to be developed to make it easier to serve them. While
this is not an issue for SASRA alone there is need to work with the MSE Authority
and MSMEs associations to explore ways of enhancing the operations of MSMEs
iv. The issue of guaranteeing MSMEs loans causes major concerns. While MSMEs find
it hard to get guarantors some Saccos refuse to accept collateral even when it is
available to secure a loan by a business. With the common bond in Saccos being
relaxed the access to social collateral will be undermined further. Exploring
alternative ways and means of guaranteeing loans is crucial. Cases of inability to
realize collateral having been irregularly disposed by borrower or the Sacco being
prevented from doing so due to court processes does not help the case for scaling up
MSME lending by Saccos
v. There are serious concerns about default risks as far as lending to MSMEs is
concerned. There is need to ensure Saccos have access to credit referencing
information of borrowers. Sharing of borrower information amongst Saccos should
also be enhanced. Since MSME focused Saccos may not have the advantage of
common bond, they should be assisted to develop capacity to assess MSMEs and
evaluate alternative means of securing loans.
vi. Since lending to MSMEs is an emerging issue away from how Saccos traditionally
operated their capacity needs to be built to ensure they offer better services and not
encounter serious issues. This includes but is not limited to:
a. Training of Saccos on MSME lending
b. Provision of guidelines on MSME lending
c. Availing research on MSME lending to ensure peer learning
vii. There are also governance challenges that SASRA needs to look into. A better
complaints management system needs to be put into place. This will boost consumer
confidence and create an early warning system where Sacco may be facing issues that
are not captured via reporting on financials
34 | P a g e
7 CHAPTER SEVEN: REGULATORY ENVIRONMENT
ISSUES
7.1 Introduction
Financing of MSMEs by Saccos poses extra challenges and risks. Consequently there is need
for SASRA to provide focused attention on this aspect of lending. Unlike lending to salaried
workers lending to MSMEs brings extra default risks. Also, MSMEs require different
products and solutions in line with their unique business needs.
Ensuring that these needs are met and that no risks are posed to the sector calls for robust
regulation while at the same time ensuring Saccos are not overly restricted in serving
MSMEs. This is a delicate balancing act. Below are the views of the players which need to be
taken into account while assessing the regulatory framework for purposes of improvements
and alignment with MSMEs needs.
7.2 Suggestions by DTS on Improvement of Regulatory Environment

The key issues suggested by the Saccos include capacity building for Saccos at 16%, make
regulations facilitative not restrictive at 13% and regulations to expand access to external
sources of funds at 10%. Other suggestions are facilitating sharing of defaulters information
at 9% and strengthening of MSME regulation and laws at 6%. Other suggestions are as
Figure 37: Suggestions by DTS on Improvement of Regulatory Environment
Suggestions by DTS on how SASRA can improve the regulatory

environment to ensure more/better service to MSMEs
Review capital adequacy ratios 5%
Relax laws on activities SACCO can engage in 5%
Make laws and regulation clear and flexible 6%
Strengthen MSME regulation and laws 6%
Facilitate sharing of defaulters information 9%
Regulations to expand access to external funds 10%
Make regulation facilitative not restrictive 13%
Capacity building for SACCOs 16%
0% 5% 10% 15% 20%

Percent Responding
Other suggestions on improving the regulatory environment include the following;
35 | P a g e
i. Provide specific regulations on MSME lending
ii. Improve SACCO supervision
iii. Allow more modes to guarantee MSME loans
iv. Training on compliance requirements/reporting
v. Regular visits to SACCOs by SASRA officials
vi. Be allowed to issue cheque books to MSMEs
vii. Remove levy on members savings
viii. Develop different regulations for different types of SACCOs
ix. Come up with ICT guidelines e.g. standard IT system
x. Allow non-members to do business with SACCOs
xi. SASRA to offer research and resources on MSME lending by SACCOs
xii. SASRA to have list of authorised debt collectors
xiii. SASRA needs to understand the relationship between MSMEs and SACCOs
7.3 Suggestions by MSMEs on Improvement of Regulatory Environment

Key suggestions by MSMEs on the improvement of the regulatory Environment include
lower/regulate interest rates and fees at 28%, review restrictive Sacco bylaws and terms at
27% and assist Saccos improve efficiency at 15%. Others suggestions are provision of funds
to boost Saccos at 11% and allowing or empowering Saccos to offer more products at 8%.
Other suggestions are shown in the figure below;
Figure 38: Suggestions by MSMEs on Improvement of Regulatory Environment
Suggestions by MSMEs on improvements in SACCO regulation

and supervision
End unethical marketing e.g. non-disclosure 1%
Ensure dividends are properly shared 2%
Enhance corporate governance 3%
Strengthen capacity of SACCO staff 4%
Grow the SACCO movement 5%
Enhance consumer and depositor protection 5%
Improve supervision e.g. visits/quarterly report 6%
Fight corruption and tribalism 6%
Allow/empower SACCOs offer more products 8%
Provide funds to boost SACCOs 11%
Assist SACCOs improve efficiency e.g. ATMs 15%
Review restrictive SACCO by-laws and terms 27%
Lower/Regulate interest rates/fees 28%
0% 10% 20% 30%

Percent Responding
36 | P a g e
7.4 Summary and Conclusions on the Regulatory Environment
In view of the above the following key issues need to be looked into as a matter of priority;
i. Review of regulations that restrict lending and provision of financial services to
MSMEs by Saccos. There is further need to assist Saccos with prudential guidelines
on MSMEs financing and resources in terms of research to ensure peer learning
ii. Creating more awareness on SASRA and its mandate. This will improve the
confidence in Saccos and allow more MSMEs to approach them for financial services
iii. Enhance consumer protection and create awareness on deposit protection mechanisms
available
iv. MSMEs expect more or less the same services from Saccos as they do from banks.
The regulatory environment should be reviewed to bridge the existing gaps
v. Saccos need to have access to credit referencing system and the national payment
system in order to enhance their services to MSMEs
37 | P a g e
8 CHAPTER EIGHT: CONCLUSIONS AND
RECCOMMENDATIONS
8.1 Conclusions
i. Saccos are a crucial source of fund for MSMEs. However the Saccos lack access to
sufficient funds due to poor diversification of their sources of funds
ii. While majority of Saccos have products targeted at MSMEs the percent of loan
portfolio disbursed to them is much lower compared with non-business clients
iii. Saccos desire to tap into additional sources of funds both internal and external.
Tapping into such funds will require support from the regulator and the government
iv. Development loans are to a large extent applied to business related purposes. This
raises the extent to which Saccos finance MSMEs albeit on an indirect manner
v. Most MSMEs join Saccos motivated by the possibilities of borrowing at cheaper
interest rates and with relaxed security mechanism
vi. While MSMEs have access to other sources of financial services MSMEs who are
Sacco members utilize Saccos more than they do other services
vii. Provision of essential business services to MSMEs by Saccos is relatively low which
places them at a disadvantaged position in competing with other financial providers
viii. While the Saccos are willing to scale up the provision of the financial services they
are hampered by lack of capacity and restrictions imposed by the regulatory regime
ix. The mobile phone plays a critical role in enhancing access to financial services from
Saccos by MSMEs
x. Key challenges faced by Saccos in serving MSMEs include default risks/poor
repayment, insufficient funds to lend and securing of the loans. The regulatory
environment is also a major challenge
xi. The key challenges faced by the MSMEs in accessing services from the Saccos
include delay in processing loan request, limitation on amount of money that can be
borrowed and getting guarantors for a loan
xii. The key suggestions by Saccos on improving the regulatory environemnt are capacity
building for Saccos, make regulations facilitative not restrictive, regulations to expand
access to external sources of funds and facilitating sharing of defaulters information
xiii. Key suggestions by MSMEs on the improvement of the regulatory Environment
include lower/regulate interest rates and fees, review restrictive Sacco bylaws and
terms and assist Saccos improve efficiency. Others suggestions are provision of funds
to boost Saccos and allowing or empowering Saccos to offer more products
8.2 Recommendations
8.2.1 Recommendations on Funding and Sources of Funds
i. SASRA should assist Saccos through regulatory and other support to access diverse
sources of funds including but not limited to capital markets
38 | P a g e
ii. Saccos through their umbrella bodies should lobby national and county government to
provide them with cheap funding for onward lending to MSMEs
iii. Saccos should have a way of accessing a centralized lender to cater for short-term
gaps like is the case with banks
8.2.2 Recommendations on MSME Lending Framework
iv. The provisions in the Sacco Societies Act need to be reviewed to provide for
prudential guidelines on lending to MSMEs
v. Saccos should allow for diverse loan guarantee mechanisms other than guarantors so
that MSMEs can use collateral to secure loans without any need for guarantors
vi. Saccos should be allowed unfettered access to full borrower information from the
credit referencing bureaus. The CRB law needs to be amended accordingly
vii. Saccos should keep proper records and disclosures on business lending and categorize
business loans according to type of businesses financed.
viii. There is need for a policy guideline/framework on lending to MSMEs by SACCOs
ix. Saccos capacity needs to be enhanced to ensure they take full advantage of the
regulated environment. This includes civic education on legal framework, training on
MSME financing and improvement of technology and corporate governance
8.2.3 Recommendations on Offering Business Finance Services
x. Saccos should be allowed access to the national payment system to ensure they can
seamlessly offer various payment solutions required by businesses
xi. Saccos should exploit the SASRA license to mainstream themselves in the national
financial system. The current regulation regime has improved stability and outlook of
the sector and Saccos should take advantage of that to position themselves
xii. Promoting Saccos ability to offer a broad array of services will minimize the need for
Saccos to want to convert into banks or acquire banks
8.2.4 Recommendations on Regulatory Environment
xiii. Players seem to have many issues with the regulatory environment. SASRA should
consider creating a stakeholders forum that can work to ensure the laws and
regulations are clear and flexible and that they are understood and accepted
xiv. SASRA should create regulations that enhance speedy resolution of disputes and
conflicts. A responsive complaint handling mechanism should be put in place
xv. The supervision needs to be tightened and more frequent reporting of Saccos and
publishing of results is needed to enhance transparency and confidence in the sector
xvi. SASRA needs to create more awareness on its roles and mandate and to enhance its
image among stakeholders so that it is viewed as a facilitator rather than a road block.
This should begin with DTS followed by SACCO members and the general public
xvii. The Sacco movement needs to be better organized and to have a strong umbrella body
like other financial sectors. This will ensure laws and regulations accommodates the
sectors interests and also promote self regulation where possible
39 | P a g e
REFERENCES
Capital Markets Authority. (2010). Capital Raising Opportunities For SMEs: The
Development Of Micro-Cap Securities Markets In Kenya. Nairobi, Kenya: Author
Financial Sector Regulators Forum. (2012). Financial Sector Stability Report, 2013.
Nairobi Kenya: Author
Financial Sector Regulators Forum. (2014). Financial Sector Stability Report, 2013.
Nairobi Kenya: Author
FSD Kenya. (2013). FinAccess National Survey, 2013. Nairobi, Kenya: Author
Kenya Institute for Public Policy Research and Analysis (KIPPRA). (2013). Kenya
Economic Report 2013, Nairobi, Kenya: Author.
Kenya National Bureau of Statistics. (2014). Economic Survey 2014. Nairobi, Kenya:
Author
Kenya National Bureau of Statistics. (2014). Information on the revised national accounts.
Nairobi, Kenya: Author
Micro and Small Enterprises Act 2012, No. 55 of 2012
SASRA. (2014). Sacco Supervision Annual Report 2013 (Deposit Taking Saccos)
Retrieved from,
http://www.sasra.go.ke/index.php/resources/publications#.VCMwc_mSyQE
World Council of Credit Unions. (2014). 2013 Statistical Report. Washington USA: Author
40 | P a g e
9 APPENDICES
Appendix A: Sampling Plan

Table 8: Sampling Plan
DTS %OF FINAL

COUNTY MEMBERS TOTAL SAMPLE ADJUST SAMPLE MICRO SMALL MEDIUM
NAIROBI 587,403 21% 83 83 83 58 17 8
NYAMIRA 2,738 0% 0 10 10 7 2 1
KISII 237,920 8% 34 34 34 23 7 3
MIGORI 7,037 0% 1 9 10 7 2 1
HOMA BAY 3,614 0% 1 9 10 7 2 1
KISUMU 14,818 1% 2 8 10 7 2 1
SIAYA 3,693 0% 1 9 10 7 2 1
BUSIA 4,451 0% 1 9 10 7 2 1
BUNGOMA 11,647 0% 2 8 10 7 2 1
VIHIGA 7,401 0% 1 9 10 7 2 1
KAKAMEGA 111,987
4% 16 16 16 11 3 2
BOMET 62,935 2% 9 1 10 7 2 1
KERICHO 125,278 4% 18 18 18 12 4 2
KAJIADO 2,842 0% 0 10 10 7 2 1
NAROK 3,527 0% 0 10 10 7 2 1
NAKURU 18,219 1% 3 7 10 7 2 1
LAIKIPIA 4,991 0% 1 9 10 7 2 1
BARINGO 56,571 2% 8 2 10 7 2 1
NANDI 15,978 1% 2 8 10 7 2 1
ELGEYO 5,215
MARAKWET 0% 1 9 10 7 2 1
UASIN GISHU 11,134 0% 2 8 10 7 2 1
TRANS 4,779
NZOIA 0% 1 9 10 7 2 1
SAMBURU 1,953 0% 0 10 10 7 2 1
WEST POKOT 3,478 0% 0 10 10 7 2 1
KIAMBU 268,660 9% 38 38 38 27 8 4
MURANG'A 239,262 8% 34 34 34 24 7 3
KIRINYAGA 202,210 7% 29 29 29 20 6 3
NYERI 249,969 9% 35 35 35 25 7 4
NYANDARUA 24,590 1% 3 7 10 7 2 1
MACHAKOS 37,416 1% 5 5 10 7 2 1
KITUI 13,021 0% 2 8 10 7 2 1
EMBU 54,984 2% 8 2 10 7 2 1
THARAKA 23,939
NITHI 1% 3 7 10 7 2 1
MERU 226,652 8% 32 32 32 22 6 3
ISIOLO 96,234 3% 14 14 14 10 3 1
MARSABIT 897 0% 0 10 10 7 2 1
TAITA 3,561
TAVETA 0% 1 9 10 7 2 1
41 | P a g e
LAMU 5,956 0% 1 9 10 7 2 1
TANA RIVER 1,123 0% 0 10 10 7 2 1
KILIFI 46,699 2% 7 3 10 7 2 1
KWALE 2,759 0% 0 10 10 7 2 1
MOMBASA 27,631 1% 4 6 10 7 2 1
2,835,172 100% 400 651 456 130 65
42 | P a g e
Appendix B: List of Respondent Saccos
Table 9: Respondent Saccos
No. Sacco Name

1. Washa Sacco Ltd
2. Mombasa Port Sacco Ltd
3. Bandari Sacco Society Ltd
4. Tembo SACCO
5. Dimkes SACCO LTD
6. Metropolitan Teachers Sacco
7. Githunguri Dairy And Community Sacco Ltd
8. Biashara SACCO SOCIETY LTD
9. Mentor SACCO
10. Fariji Sacco Ltd
11. 2nk Sacco Society Ltd
12. Asili Sacco Society Ltd
13. Nyahururu Umoja Sacco Society Ltd
14. Capital Sacco Ltd
15. Nyeri Teachers Sacco
16. Taifa Sacco
17. Nest SACCO LTD
18. Ardhi Sacco Society Ltd
19. Sheria SACCO SOCIETY LTD
20. Centenary SACCO
21. Waumini SACCO SOCIETY LTD
22. Nacico Sacco Society Ltd
23. Nandi Hekima Sacco Society Ltd
24. Nafaka SACCO SOCIETY LTD
25. Wana-Anga Sacco Ltd
26. Nandi Farmers Sacco Society Ltd
27. Transnational Times Sacco
28. Chuna
29. Kolenge Tea Saving And Credit Co-Op Society
30. Hazina SACCO SOCIETY LTD
31. Solution SACCO
32. Kenya Police Sacco
33. Stima SACCO SOCIETY LTD
34. Magereza Sacco
35. County Savings And Credit Cooperative Society Ltd
36. Chai Sacco Ltd
37. Telepost SACCO LTD
38. Ukulima SACCO LTD
39. Nandi Teachers Sacco Society Ltd
43 | P a g e
40. Winas Sacco Ltd
41. Ufanisi Co-Operative Saving And Credit Society Ltd
42. Simba Chai Sacco Ltd
43. Kenya Bankers Savings & Credit Co-Op Society
44. Jacaranda Sacco
45. Nassefu Sacco Ltd
46. Nawiri Sacco Ltd
47. Koru Sacco Society
48. Miliki Savings And Credit Society
49. Maisha Bora Sacco Ltd
50. Safaricom Sacco Ltd
51. Kenya Achievas Sacco Ltd
52. Kiambaa Dairy Rural Sacco
53. Banana Hill Matatu Sacco Ltd
54. Fundilima Sacco
55. Puan Savings And Credit Society
56. Mwito SACCO SOCIETY LTD
57. Wareng Teachers Sacco
58. Gastameco Sacco
59. Jijenge Sacco
60. Narok Trs Sacco
61. Limuru Trade Sacco Ltd
62. Muki Sacco Ltd
63. Times U SACCO LTD
64. Vision Africa Sacco
65. Wakenya Pamoja Sacco Society Ltd
66. Ndosha SACCO LTD
67. Kathera Rural
68. All Churches Sacco
69. Egerton University Sacco Ltd
70. Siraj Sacco
71. Fortune Sacco Ltd
72. Southern Star Sacco
73. Jumuika (Chemilil) Sacco Ltd
74. Kenpipe Sacco Ltd
75. Kenya Canners Sacco Ltd
76. Ntala Vision Sacco Society Ltd
77. Moi University Sacco Ltd
78. Nitunze SACCO LTD
79. Murata Sacco Limited
80. Keiyo Teachers Sacco Ltd
81. Wevarsity Sacco Soc Ltd
44 | P a g e
82. Good Faith Sacco Society Ltd
83. Kakamega Teachers Sacco Society Ltd
84. Aberdare Sacco Society Limited
85. Sitico Sacco
86. Enea Sacco
87. Comoco Sacco Society Ltd
88. Kite Sacco Society Ltd
89. Imarisha Sacco Societyltd
90. Kenya Midland Sacco Ltd
91. Kingdom Sacco Ltd
92. Wanandege Sacco Ltd
93. Thamani Sacco Ltd
94. Jamii Sacco Ltd
95. Daima SACCO LTD
96. Bingwa SACCO
97. Ndeika SACCO
98. Baraka SACCO LTD
99. Stegro Sacco Ltd
100. Agro-Chem Sacco Ltd
101. Patnas Sacco Ltd
102. Tenhus Sacco Ltd
103. K-Unity Sacco Ltd
104. Nyamira Tea Farmers Sacco Ltd
105. Kipsigis Edis Sacco Ltd
106. Orient Sacco
107. Afya Sacco
108. Nation Sacco
109. Muhigia Sacco
110. Elimu Sacco
111. Harambee Sacco
112. Tai Sacco
45 | P a g e
Appendix C: Data Collection Tools
DEPOSIT TAKING SACCO QUESTIONNAIRE
Form Serial No: Date of interview:_____/_____/______ Time:____/___/___
_______ dd mm yyyy hh mm
Am/Pm
Associate Consulting Africa Ltd has been contracted by the Sacco Societies Regulatory
Authority (SASRA) to conduct a survey with the objective of determining the extent to which
SACCOs finance Micro Small and Medium Enterprises (MSMEs). The results of the survey
will be used to guide policy developments towards improving the role of SACCOs in
financing this critical sector of the economy.
We are therefore requesting you to spare a few minutes to discuss with us issues related to
this very important sector. We assure you that the information provided will be treated in
confidence and shall be used solely for the purposes of this survey. Thank you
PART A: GENERAL DETAILS

1. General business details
Name of
respondent:
Designation/Official
title
Full Official Name
of the SACCO
2. For how long has the SACCO been in operation?_________
PART B: SACCO FINANCIAL SERVICES TO MSMES

3. Do you have products targeted at micro, small and medium enterprises ?
Yes No
4. If you do not have business financial products what are the reasons for not offering
such products/services?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
5. If you have products for micro small and medium enterprises do you have any official
way of defining these enterprises? Yes No
6. If yes above how do you define the MSMEs as per the criteria below?
Criteria Micro Enterprise Small Enterprise Medium Enterprise
No. of employee
Annual turnover in
46 | P a g e
KShs
7. If you have business finance products on offer kindly indicate the products
a. Savings products
Product Description
b. Loan products
Product Description
c. Other products
Product Description
8. What percentage of your loan portfolio is currently availed to the following category
of customers?
Category % of loan portfolio Amount lent in KShs
Business customers
Non business
customers
Total 100%
9. Would you be willing to increase the percentage of your lending capacity available to
MSMEs in the future? Yes No
10. What are the sources of the funds used for business lending?
Source of funds % contribution to total business lending
11. Are there other sources of funds you would like to utilize but are currently not able
to? Yes No
12. If yes in 10 above what are some of those sources
a. _______________________________________________________________
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b. _______________________________________________________________
c. _______________________________________________________________
13. If yes above what challenges prevent you from accessing those sources of funds?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
14. What support would you need to increase your sources of funds?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
15. What is the average size of business loan taken over the last one year?KShs________
16. What is the maximum size of loan available for a business KShs_______________
17. What is the current interest rate you are charging for business loans_______%
18. What is the average duration of a business loan?___________months
19. How would you describe repayment rate for business loans?
a. Excellent
b. Very good
c. Good
d. Fair
e. Poor
20. Are you able to disaggregate the loans provided to business according to type of
business financed? Yes No
21. If Yes above kindly indicate the percentage of the loan portfolio lent to the following
business categories
Business Category % of total business loan
portfolio lent to this category
Agriculture/farming
Wholesale and retail trade, restaurant and hotels
Financial services e.g. insurance, agent of shares
Manufacturing
Real estate (e.g. owning rental houses, land buying
selling and estate management
Transport
Communication e.g. ICT businesses
Construction
Services (beauty, professional, repairs etc)
Electricity and water
Total 100%
22. Are you able to disaggregate the loans provided to business according to the size of
business financed? Yes No
23. If yes above kindly indicate the percentage of the loan portfolio currently let to the
following business categories
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Business Category % of total business loan portfolio lent to this
category
Micro enterprise
Small enterprise
Medium enterprise
Large enterprise
Total 100%
24. If you are unable to disaggregate the loan portfolio according to any of the above
categories what are the reasons for that?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
25. When providing development loans do you establish whether the loan is used for
business or non-business purposes? Yes No
26. If yes above kindly indicate what percentage of development loans is utilized for
these purposes
Utilisation of development loan % of loan used for this purpose
Business
Non-business
Combination of business and non-
business
Total 100%
27. To what extent do you think development loans are used for business related
purposes? (tick one only)
To a very large extent
To a large extent
To a small extent
To a very small extent
28. Do you provide any of the following business finance products?
I have accessed the following business finance service Yes No
Asset finance e.g. for buying business vehicle, equipment, machines etc
Invoice discounting (received cash based on an invoice)
Letter of credit, guarantee and bid bonds (SACCO guaranteed you to
supply goods and services)
LPO finance (SACCO provided you with finances based on a local
purchase order thus enabling you to supply goods)
Cheque discounting (received cash pending clearing of a cheque)
Overdraft (allowed you to access below your deposit balance to meet
urgent business obligations)
Insurance premium financing (SACCO provided you with fiancs to pay
off your premium at once and then repay the SACCO over time)
49 | P a g e
Other (please explain)
29. Do you provide any of the following financial products/services? Tick as many as are
available
I have accessed the following financial services through the SACCO Yes No
Access to ATM
Cheque book
Cheque deposit
Insurance products
Pension products
Investment products such as shares, bonds, treasury bills etc
30. Are there any business finance products you would like to offer but are not currently
able to offer Yes No
31. If yes above what are the products and what are the reasons for not being able to offer
them?
Product or service we would like to Reasons we are unable to offer the product
offer to business clients or service
32. What support would you need in order to offer the financial services to MSMEs that
you are currently not offering?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
PART C: POLICY AND REGULATORY RECOMMENDATIONS

33. What challenges have you faced providing financial services to MSMEs
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
e. _______________________________________________________________
34. What support would you require to overcome the above challenges
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
50 | P a g e
35. What improvements in SACCO regulation and supervision would you recommend
SASRA to undertake in order to improve your ability to provide services to MSMEs
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
e. _______________________________________________________________
PART D: CONTACTS
1. Phone number of the person interviewed
2. Name of person conducting interview
3. Phone number of person conducting the interview
4. Time interview ended Time:____/____/___
hh mm Am/Pm
5. Any remarks by interviewer?
51 | P a g e
QUESTIONNAIRE FOR MICRO SMALL AND MEDIUM ENTERPRISES (MSMES)
Form Serial No: Date of interview:_____/_____/______ Time:____/___/___
_______ dd mm yyyy hh mm Am/Pm
Associate Consulting Africa Ltd has been contracted by the Sacco Societies Regulatory
Authority (SASRA) to conducting a survey with the objective of determining the extent to
which SACCOs finance Micro Small and Medium Enterprises (MSMEs). The results of the
survey will be used to guide policy developments towards improving the role of SACCOs in
financing this critical sector of the economy.
We are therefore requesting you to spare a few minutes to discuss with us issues related to
this very important sector. We assure you that the information provided will be treated in
confidence and shall be used solely for the purposes of this survey. Thank you
PART A: GENERAL DETAILS

1. General business details
Name of
respondent:
Gender of Male Female
respondent
Name of the
business
Location of the County Constituency
business
How long have you Less than 5 years More than five years
been in business
2. What type of business are you involved in
Business Category
Agriculture/farming
Wholesale and retail trade, restaurant and hotels
Financial services e.g. insurance, agent of shares
Manufacturing
Real estate (e.g. owning rental houses, land buying selling and estate
management
Transport
Communication e.g. ICT businesses
Construction
Services (beauty, professional, repairs etc)
Electricity and water
Mining and quarrying
3. How many employees do you have in your business
52 | P a g e
Year 2012 2013 2014
Total number employed
4. What was your annual turnover or sales during the following business year
Year 2012 2013
Amount sold in Kenya shillings
5. Which of the following financial services have you used in the last one year
Tick as many Financial Service Accessed
as apply
Bank
SACCO
Micro finance institution
Informal group e.g. chama/ROSCA
Mobile Financial Service e.g. M-pesa, Airtel money etc
Insurance company e.g. NHIF
Pension e.g. NSSF, Mbao pension etc
Borrowing from individuals e.g. friends, family, associates
6. Are you a member of a SACCO? Yes No
7. If yes in 6 what is the name of the SACCO you belong to
a. _______________________________________________________________
b. _______________________________________________________________
PART B: SACCO BUSINESS SERVICES
8. For how long have you been a member of the SACCOs
Less than 5 years More than 5 years
9. What factors motivated you to join the SACCO as a business person
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
10. Since joining the SACCO have you ever taken a loan for business purposes?
Yes No
11. If no above what challenges if any have prevented you from taking a business loan
from the SACCO
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
12. If you have taken a loan for business from a SACCO kindly provide the following
details
Description Amount Duration Interest
rate
Lowest amount of business loan borrowed from
53 | P a g e
SACCO
Highest amount of business loan borrowed from
SACCO
13. If you have taken a business loan from the SACCO how did you guarantee the loan
Collateral e.g. logbook or title
Guarantors i.e. guaranteed by fellow SACCO members
Salary
Other (please explain)_____________________
14. What was the purpose of borrowing the money for the business in your latest
borrowing?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
15. Why did you prefer borrowing from the SACCO as opposed to other financial
institutions?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
16. Did you borrow from a SACCO for business purposes in the previous business year
(2013)? Yes No
17. If yes in 18 above how much did you borrow?_KShs__________________
18. How much interest did you pay for your last business loan from a SACCO?______%
19. Have you ever accessed any of the following business financial services from your
SACCO?
I have accessed the following business finance service Yes No
Asset finance e.g. for buying business vehicle, equipment, machines etc
Invoice discounting (received cash based on an invoice)
Letter of credit, guarantee and bid bonds (SACCO guaranteed you to
supply goods and services)
LPO finance (SACCO provided you with finances based on a local
purchase order thus enabling you to supply goods)
Cheque discounting (received cash pending clearing of a cheque)
Overdraft (allowed you to access below your deposit balance to meet
urgent business obligations)
Insurance premium financing (SACCO provided you with fiancs to pay
off your premium at once and then repay the SACCO over time)
Other (please explain)
20. Have you accessed any of the following financial services through your SACCO?
I have accessed the following financial services through the SACCO Yes No
Access to ATM
54 | P a g e
Cheque book
Cheque deposit
Insurance products
Pension products
Investment products such as shares, bonds, treasury bills etc
21. Are you able to access any financial services from your SACCO through your mobile
phone Yes No
22. If yes above what financial services are you able to access from the SACCO through
your mobile phone?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
PART C: POLICY AND REGULATORY RECOMMENDATIONS
23. What challenges have you faced in accessing financial services for you business from
SACCOs?
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
24. What improvements in SACCO regulation and supervision would you recommend
SASRA to undertake in order to improve your confidence in using SACCOs for
business finance services
a. _______________________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. _______________________________________________________________
PART D: CONTACTS
1. Phone number of the person interviewed
2. Name of person conducting interview
3. Phone number of person conducting the interview
4. Time interview ended Time:____/____/___
hh mm Am/Pm
5. Any remarks by interviewer?
55 | P a g e

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2014

THE EXTENT TO WHICH DEPOSIT TAKING

Signed: _______________________ Date: ____________________

Signed: _______________________ Date: ____________________

For and on behalf of Associate Consulting Africa Ltd, Nairobi Kenya

Copyright 2014. The SACCO Societies Regulatory Authority

ACKNOWLEDGEMENT ....................................................................................................... III

Figure 1: Graph of GDP Growth Rate ....................................................................................... 3

Table 1: Composition of Financial Institutions ......................................................................... 6

ACAL Associate Consulting Africa Ltd

Findings in relation to funding of MSMEs by Saccos include the following;

Key findings in terms of borrowing from Saccos by MSMEs are as follows;

In view of the above the following recommendations are made;

1.2 Purposes of the Study

1.3 Objectives of the Study

1.5 Research Methodology

1.6 Structure of the Report

2.1 Kenya Macroeconomic Update

Figure 1: Graph of GDP Growth Rate

Sources: KNBS, 2014

Figure 2: Commercial Banks Weighted Average Lending Rates

Commercial Banks Weighted Average Interest Rates

Sources: Data CBK, Illustrations by the Author

Figure 3: Overall Rate of Inflation

Overall Rate of Inflation

Sources: Data CBK, Illustrations by the Author

2.1.4 Exchange Rates

Figure 4: Exchange Rates for Key Select Currencies

Unweighted Average of Buying and Selling Rates

Sources: Data CBK, Illustrations by the Author

Table 1: Composition of Financial Institutions

Institution Type No. of Licensees Regulator

Figure 5: Assets Held by Players in the Financial Services Sector

Assets of Financial Services Sector

2.3 Overview of the Sacco Subsector

2.3.2 Performance of the Sacco Subsector 2013

Table 2: Performance of the Sacco Subsector in 2013

MEASURE 2013 2012 CHANGE (%)

Table 3: Performance of the Deposit Taking Saccos in 2013

Performance 135 Licensed DTS 215 DTS 1,995 Saccos

2.3.4 Comparison of the Kenya Sacco Subsector with other Countries

Figure 6: Kenyas Proportionate Contribution to Africa Sacco Subsector

Kenya's Proportion of Africa Sacco Subsector

0% 20% 40% 60% 80% 100%

3.2 Extent of MSMEs Financing by Saccos

Figure 7: Availability of MSME Loans in Saccos

Do you have loan products targeted at micro, small and medium

Sources: SASRA Saccos-MSMEs Survey 2014

3.2.2 Percent of Loan Portfolio Disbursed to MSMEs

Sources: SASRA Saccos-MSMEs Survey 2014

Table 4: Extent of Sacco Lending to MSMEs

Table 5: Lending to Businesses by Banks as at 31st December 2014

Banks Lending as at 31st Dec 2013 Amount (KShs billion)

Figure 9: Willingness to Scale up Lending to MSMEs

Would you be willing to increase the percentage of your lending

Sources: SASRA Saccos-MSMEs Survey 2014

3.3.2 Sources of Funds for MSME Lending

Figure 10: Sources of Funds for MSME Lending

Sources: SASRA Saccos-MSMEs Survey 2014

3.3.3 Availability of Untapped Sources of Funds

Figure 11: Availability of Untapped Sources of Funds

Sources: SASRA Saccos-MSMEs Survey 2014

3.3.4 Preferred Extra Sources of External Funds

Preferred Alternative Sources of Funds for MSME Lending

Signed: ___ Date:

Signed: ___ Date: