By Eddah Waithaka
The government has introduced two key reforms to tighten oversight of Savings and Credit Cooperatives (SACCOs) following recent financial scandals.
Cabinet Secretary Wycliffe Oparanya, who heads the Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development, announced the measures on Wednesday.
The ministry has formed a five-member Committee of Experts to review the outdated SACCO Societies Act (2008 and a new transition board to lead the Kenya Union of Savings and Credit Cooperatives (KUSSCO) for the next two years.
Key reforms have been unveiled, starting with the establishment of a committee tasked with modernizing SACCO (Savings and Credit Cooperative Organizations) laws.
This expert team will analyze existing regulations and propose necessary legal and administrative changes to enhance SACCO operations, primarily focusing on aligning the SACCO Societies Act with recently adopted policies.
These policies include the establishment of a Central Liquidity Facility, akin to safety nets in banks, the creation of a Deposit Guarantee Fund to safeguard members’ savings, and the fortification of rules on shared services and resource management among SACCOs.
In light of this, the government has put a three-month suspension on new SACCO registrations pending the committee’s recommendations.
Additionally, the ministry has inaugurated a new KUSSCO (Kenya Union of Savings and Credit Cooperatives) transition board, replacing the interim team that had served for the past year, to drive the restructuring efforts forward.
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The newly inaugurated KUSSCO transition board will be responsible for restructuring KUSSCO to achieve better governance and efficiency, overseeing asset recovery efforts, and guiding KUSSCO’s transition into a National Cooperative Federation.
Crackdown on Mismanagement
The reforms follow recent revelations of widespread misuse of SACCO funds, prompting stricter regulations.
Three months ago, Commissioner of Co-operatives David Obonyo outlined tougher compliance rules to curb financial malpractice.
CS Oparanya emphasized that the changes aim to safeguard Kenya’s cooperative movement. “We congratulate the new Committee of Experts and KUSSCO board. Their leadership will drive reforms benefiting millions of SACCO members,” he said.
The moves signal the government’s push to restore trust in SACCOs, which serve millions of Kenyans.
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