What Is a Healthy SACCO NPL Ratio?

The non-performing loan ratio shows the share of a SACCO’s loan book that has moved into serious arrears. SASRA reported an aggregate NPL ratio of about 8.56% for regulated SACCOs in 2024. The sector average is a reference point, not a target.

How the ratio works

If a SACCO has KES 10 billion in gross loans and KES 800 million is non-performing, the NPL ratio is 8%. The exact classification follows regulatory rules based on how long payments have remained overdue and the condition of the facility.

Is 8.56% healthy?

Lower is generally better because more borrowers are paying on time. A ratio above the sector average deserves explanation, but context matters. An agriculture-based SACCO may face seasonal stress, while an employer-based SACCO may be hit by layoffs or non-remitted payroll deductions.

Why members should care

Non-performing loans reduce expected interest income and require provisions for possible losses. Those provisions reduce surplus. Bad loans can also trap cash, making it harder to disburse new loans or process refunds.

Read the trend, not one number

Compare at least three years. A SACCO moving from 4% to 8% is more concerning than one that has reduced its ratio from 12% to 8%. Check whether provisions and recovery efforts have kept pace.

Questions for the AGM

What caused the arrears? Which member groups are affected? How much has been provided? Are guarantors being pursued fairly? Has the SACCO changed its underwriting? Clear answers matter more than a polished headline.

Bottom line

There is no magic ratio that makes a SACCO safe. A low and improving NPL ratio, backed by adequate provisions and honest reporting, is the stronger signal.

Editorial note: Compare the individual SACCO’s ratio and trend with its peers and business model.