The Kenyan government has imposed a three-month freeze on new SACCO registrations as it begins reforms aimed at tackling fraud and regulatory weaknesses in the cooperative sector.
Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya announced the moratorium in response to growing concerns over member exploitation and financial mismanagement.
The move follows the findings of a PwC forensic audit, which uncovered a staggering Ksh.13.3 billion loss at the Kenya Union of Savings and Credit Co-operatives (KUSCCO).
The audit revealed inflated asset valuations, fictitious dividends, and misappropriated commissions, pointing to a deep-seated governance failures and prompting a crackdown on oversight loopholes.
To spearhead the reform agenda, the government has appointed a five-member Committee of Experts, chaired by Marlene Shiels of Scotland’s Capital Credit Union.
Also Read: Urgent Reforms in SACCOs Essential for Economic Growth, Says CS Oparanya
The team will lead a comprehensive review of the SACCO Societies Act (2008), with a mandate to recommend structural reforms.
Key areas of focus include:
-Strengthening governance frameworks
-Establishing a Deposit Guarantee Fund
-Aligning Kenya’s SACCO system with international best practices
Oparanya said the reforms are critical to restoring public trust and safeguarding the savings of millions of Kenyans who rely on SACCOs for credit and financial security.
During a press briefing with the Kenya National Police DT SACCO in September 2024, CS Oparanya lauded SACCOs for mobilizing over Ksh.1.2 trillion in savings, disbursing Ksh.1 billion in loans, and accumulating an asset base of Ksh.1.7 billion.
These figures indicate SACCOs have played a significant role in offering financial inclusion to millions of Kenyans, especially in rural and underserved areas.
“SACCOs have the potential to be powerful drivers of economic growth and social development in Kenya,” said Oparanya.
He added that “by strengthening their governance and providing them with the necessary tools and support, we can unleash their full potential.”
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