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Most sacco loans used to build homes, buy plots - Sasra report

The Star logo The Star 21/02/2019 The Star
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Majority of Sacco borrowers put their loans into buying land or building homes, a survey by the market regulator shows.

A report on the Sectoral Financing by Sacco Societies Regulatory Authority (Sasra) shows that 36 per cent of total outstanding credit by December 2016 was used in the housing and land sector.

'Finances to this sector amounting to Sh110 billion financed either a purchase of parcels of land or constructions with only a paltry being used for land acquisition services such as valuation,' says the report.

Trade is the second most popular portfolio for credit financing for the five year period ending December 2016. It received Sh67 billion of the total loans borrowed, or 20.5 per cent.

Out of the amount, Sh63 billion was channeled to wholesale and retail businesses while Sh4 billion went to financing foreign trade and transport businesses.

Consumption needs and social activities accounted for Sh47 billion or 14.5 per cent of loans taken during the period.

Education loans stood at12 per cent of the total credit financing at Sh39 billion, while agriculture received 6.6 per cent or Sh21 Billion of the total credit financing for the five years under study, indicating the dwindling allure of agriculture.

The report is a comprehensive baseline study survey to determine the extent and nature of sectoral lending in Saccos, and to explore the possibility of recommending a uniform sectoral financing reporting system.

It was financed by the National Treasury Financial Sector Support Project.

The findings will be used to recommend a uniform and standard sectoral reporting framework for lending by deposit taking Saccos.

It will specifically identify which products, services and financing approaches have worked for different groups of beneficiaries such as farmers, working groups among other Sacco members.

It is expected to also inform market players, particularly in loan product and services development which meet needs of consumers of Sacco credit financial services.

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