The government has announced the inauguration of two critical frameworks in a bid to strengthen the governance of SACCOs after recent scandals.
On Wednesday, May 21, Cabinet Secretary for the Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development, Wycliffe Oparanya, oversaw the formation of a new board to manage the Kenya Union of Savings and Credit Cooperatives (KUSSCO) and a special team of experts to review outdated laws governing SACCOs.
According to Oparanya, the newly constituted five-member Committee of Experts will be primarily tasked with reviewing the SACCO Societies Act of 2008, which the government feels is getting outdated.
The committee is expected to analyse existing regulations and recommend institutional and administrative reforms which will improve the operational efficiency of SACCOs.
A broader mandate of the committee will be to evaluate the SACCO Societies Act of 2008 and align it with Cabinet-approved policies.
Pending recommendations from the Committee of Experts, registration of new SACCOs will be suspended for three months.
Some of the approved policies include creating a Central Liquidity Facility for SACCOs (a safety net similar to what banks have), setting up a Deposit Guarantee Fund to protect members’ savings, and improving regulations around how SACCOs share services and resources.
On Wednesday, the ministry also presided over the inauguration of the new transition board for KUSSCO, which is set to serve for a two-year term. The previous board served on an interim basis for a year.
The new board has the daunting task of restructuring KUSSCO for better governance and efficiency. The new board will also oversee asset recovery while also overseeing KUSSCO's transition into a National Cooperative Federation as per the vision of the ongoing reforms.
Oparanya reiterated that the twin reforms were part of a wider strategy to full-proof the country's cooperative movement, amid recent controversies.
"On behalf of the Ministry, I congratulate the newly inaugurated Committee of Experts and KUSCCO Board Members. We look forward to their leadership in implementing reforms that benefit millions of SACCO members across Kenya," the CS said.
The fresh reforms came barely three months after Commissioner of Co-operatives David K. K. Obonyo detailed new measures set to be implemented to regulate SACCOs, which will now be required to comply with stricter guidelines in a bid to curb the widespread mismanagement of members' funds.
Obonyo revealed that the Ministry of Co-operatives had conducted a thorough inspection through ministry auditors and KUSCCO’s Interim Board, uncovering startling findings.
One of the key discoveries was that the exaggeration of dividends was among the major financial irregularities the institution was facing. To curb this, Obonyo revealed plans to regulate SACCO investments to ensure they focus on their core functions—mobilising deposits and lending.
