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Saccos registration halted for 3 months on reforms
Cooperatives and Micro, Small, and Medium Enterprises Cabinet Secretary Wycliffe Oparanya addressing journalists during the inauguration of the Committee of Experts to review the Sacco Societies Act and the inauguration of the new Kenya Union of Savings and Credit Cooperative Organisations (Kuscco) Board at NSSF Building in Nairobi on May 21, 2025.
The Ministry of Cooperatives has announced a moratorium on the registration of new Saccos for at least three months as it begins the process of overhauling the sector’s regulations.
The move comes after a multi-billion-shilling fraud was uncovered at Kenya Union of Savings and Credit Cooperatives (Kuscco) in which scores of individual Saccos lost all or part of their deposits.
The Ministry’s Cabinet Secretary Wycliffe Oparanya announced the decision on Wednesday as he inaugurated a five-member committee of experts that is expected to review the Sacco Societies Act, 2008 and propose legislative and institutional reforms to tighten the sector’s supervision.
While hinting at tightening the rules for forming and registering Saccos, Mr Oparanya said the Ministry has noticed a trend where suspicious individuals register outfits styled as Saccos, especially in build up to elections, and then end up defrauding people.
“The government has decided to suspend the registration of any Sacco until we get recommendations from these experts for the improvement of the sector... We feel we have been very lenient and because of that, so many Saccos are mushrooming,” said Mr Oparanya in a press briefing.
The committee, which is chaired by Marlene Shiels, who is also the CEO of UK-based Capital Credit Union, is expected to, among other deliverables, guide in the establishment of a Sacco deposit guarantee fund that will shield savers from total losses in case any Sacco collapses.
The deposit guarantee fund will mirror the practice in the banking sector where Kenya Deposit Insurance Corporation runs a fund that compensates savers up to Sh500,000 in case a bank collapses.
In addition, the committee will also guide the sector in the establishment of a central liquidity facility, giving Saccos a window to borrow from each other and improve their liquidity without having to rely on external borrowing.
“The Committee will serve for a three-month period, effective immediately, and is expected to provide comprehensive and actionable recommendations to guide future legislative amendments,” said Mr Oparanya.
At the same time, Mr Oparanya inaugurated an 11-member transition board of directors of Kuscco for a two-year term, following their appointment by the Commissioner for Cooperative Development.
The new board is expected to lead the process of restructuring Kuscco to enhance efficiency and corporate governance following a Sh13 billion heist that was linked to key figures in management who have since been fired and sued. The new board will also oversee the process of recovering assets.
Kuscco Chief Executive Arnold Munene announced last month the union targets to recover at least 70 percent of the Sh8.8 billion principal amount that Saccos had invested in the umbrella entity within the next three years.
Kuscco targets to get the amount from various initiatives including sale of 60 percent stake in Kuscco Mutual Assurance—the insurance subsidiary—, auction of houses and land held by defaulters of mortgages issued under the Kuscco Housing Cooperative and recovery of loans from Saccos who had defaulted on payment.
