SACCOs Want Law on Loan Recovery

By Egessa Hajusu,


Savings and Credit Cooperatives (SACCOs) are grappling with loan recovery, after the revocation of the arbitration system. They are appealing to Parliament to enact a law to facilitate recovery of loans.

“The arbitration system through which SACCOs recovered loans was revoked after the commencement of the Tier 4 Microfinance Institutions and Money Lenders Act 2016 which came into force 1st July 2017,” said Albert, the Chairperson of Halala Halala SACCO in Busia district.

This has left SACCOs with no option but to file civil suits in Courts of law just like other businesses, and this has been to their detriment because of exorbitant legal costs.

SACCOs had hoped that the small claims system introduced by Courts would help them to easily recover loans below ten million shillings, but they were dismayed to learn that the system serves only individuals and not institutions.

They are appealing for: either a law; or a special desk in the Commercial Court division to expedite the loan recovery process.

Mr. Moses Tusubira, the Manager of Halala Halala SACCO said arbitration is the cheapest way to recover loans, since SACCOs pay the arbitrator after the recovery has been made, as opposed to engaging lawyers which requires tapping into the cooperators’ savings. The latter option financially cripples SACCOs.

“SACCOs that cannot afford lawyers are definitely kicked out of business,” he said and called for quick government intervention.



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