The Cabinet has approved amendments to the Savings and Credit Cooperatives (SACCOs) Act, 2008, as part of the measures to enhance the stability, efficiency, and competitiveness of credit societies.
The approval follows a meeting held on Tuesday morning, during which the Cabinet Secretaries led by President William Ruto validated the proposed reforms as outlined in the Sacco Societies (Amendment) Bill, 2023, which is currently before Parliament.
According to a Cabinet dispatch, the reforms aim to modernise financial and technological operations of SACCOs, particularly the smaller cooperative societies.
Key amendments include the formation of a SACCO Shared Services Framework to allow financial institutions to pool resources, adopt fintech solutions, and enhance cooperation while maintaining operational independence.
They also approved the establishment of a Central Liquidity Facility (CLF) to facilitate inter-SACCO transactions, allow short-term lending, and enhance participation in the National Payment System.
During the meeting, the Cabinet also ratified reforms to the Deposit Guarantee Fund (DGF) to ensure better protection of SACCO deposits, reduce government bailout risks, and strengthen the cooperative financial sector.
“By lowering operational costs, fostering innovation, and boosting public confidence, these reforms position SACCOs as key players in Kenya’s financial inclusion and economic empowerment agenda,” read part of the cabinet dispatch.
The latest announcement comes barely a fortnight after Commissioner of Co-operatives David Obonyo hinted at the government's intention to impose stringent measures to regulate the operations of SACCOs across the country.
Obonyo, who spoke during an interview on March 3, said the measures would soon be implemented to curb the widespread financial mismanagement in some cooperative societies.
The Commissioner noted that the regulations followed the recent investigations conducted on the Kenya Union of Savings and Credit Cooperatives (KUSCCO), which unravelled glaring financial mismanagement.
"One of the issues has been falsification of records; KUSCCO was trying to declare surplus dividends from losses, something that was wrong," Obonyo said.
Obonyo's sentiments followed a week after Cooperatives Cabinet Secretary Wyckliffe Oparanya announced the government's plan to conduct an audit on all cooperative societies and bring to book corruption SACCO officials.
“The government is implementing decisive measures to address financial mismanagement. Individuals found culpable will be held accountable through the available legal and administrative framework,” Oparanya stated while addressing SACCO stakeholders on February 18.
