Gov't to introduce SACCO reforms to safeguard members' savings

According to the Principal Secretary in the Ministry of Co-operatives and Micro, Small & Medium Enterprises (MSMEs) Development, Patrick Kilemi, the proposed fund will mirror protections offered to commercial bank depositors, cushioning SACCO members against losses in the event of institutional collapse.

The reforms in the SACCO sector are expected to provide a safety net for SACCO members while ensuring that, through amendments to the SACCO Societies Act, the regulatory body will have the tools to address the challenges the sector faces. According to PS Kilemi, the planned guarantee scheme comes amid rising concerns about governance weaknesses and cases of mismanagement in parts of the cooperative movement.

“In the next six months, we can say with confidence that we will have a new legal setup on matters SASRA Act. And why these reforms are important is because when you talk about a deposit guarantee fund, it’s deposit insurance. We have it within our banking sector. The KDIC guarantees depositors within the banking industry, that if a bank goes down, depositors are guaranteed to be at least refunded a minimum of 500,000,” said PS Kilemi.

In addition to the guarantee fund, the government intends to empower SASRA with broader oversight powers, including the authority to vet SACCO leadership before they assume office, further tightening governance standards. This, the government hopes, will ensure that only individuals with the required professional thresholds will manage members' funds.

“You have heard of people losing their life savings because of bad leadership. We are introducing a provision where the top manager will be cleared for eligibility to serve a fit and proper test so that you, as delegates, when the board presents to you a finance director, it’s not just the board. It’s SASRA and the Commissioner of Co-operatives who will be vetting the character,” added the PS.

The reforms were announced during the annual delegates meeting for the Police SACCO, which saw the SACCO announce its 4.1 billion dividend payout to members on the back of growing loan book increase, asset growth, and membership. However, the SACCO expressed concerns over the slowdown in deposits.

“The Board of Directors wishes to recommend the payment of dividend on share capital at the rate of 17 per cent, amounting to 624.3 million, and interest on deposits at a rate of 11 per cent, amounting to 3.5 billion, bringing the gross total to 4.1 billion in 2025 compared to 3.9 billion in 2024,” said Police SACCO Chair David Mategwa.