The government has ruled out imposing term limits on SACCO directors, stating that the cooperatives are private entities whose leaders should continue being elected by members through democratic processes.
In an interview on July 28, Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Wycliffe Oparanya said although the government considered introducing tenure limits after reviewing practices in other countries, it would not interfere with the autonomy of SACCOs.
“We have realized that some SACCOs have had chairpersons who have remained in office for decades. We considered introducing term limits for directors after comparing practices in other countries. However, these SACCOs are private entities formed by members and are governed by democratic principles. As long as members continue electing them, they remain in office,” Oparanya said.
Instead of limiting the tenure of elected officials, Oparanya said the government will strengthen the role of the Sacco Societies Regulatory Authority (SASRA) to improve oversight and governance across the sector.
CS Oparanya said the ministry is expanding SASRA’s mandate to enhance supervision, licensing and monitoring of SACCOs, including the use of technology to scrutinize their financial operations.
The proposed reforms will also require all SACCOs to fall under regulatory oversight, replacing the current framework where only larger deposit-taking SACCOs are comprehensively supervised.
“A shilling in a small SACCO is equal to a shilling in a bigger SACCO. Supervision is going to be critical to improve management while allowing SACCOs to make their own decisions based on their bylaws,” he said.
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SACCO Bill Proposed Amendments
The reforms are part of broader efforts to strengthen governance and restore public confidence in the cooperative movements after a financial crisis exposed weaknesses in the management of some SACCOs.
According to the proposed Sacco Societies (Amendment) Bill, 2025, a new governance framework will be established for the Deposit Guarantee Fund, including an independent Board of Trustees to oversee the protection of members’ deposits.
The Bill proposes that the Board be chaired by a non-executive chairperson appointed by the President, who must have at least 15 years of professional experience in banking, financial regulation, insurance, commerce, law, accountancy or economics.
Other members will include representatives from the National Treasury and the State Department responsible for cooperatives, alongside four independent members appointed by the Cabinet Secretary. The Chief Executive Officer of the Sacco Societies Regulatory Authority (SASRA) will serve as an ex officio member and secretary to the Board.
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To enhance independence, the Bill bars serving SACCO officials, directors, partners, associates and recent auditors of SACCOs from serving on the Board. It also requires all appointees to meet the leadership and integrity standards set out in Chapter Six of the Constitution.
The Board will be responsible for the overall management of the Deposit Guarantee Fund, including levying contributions from SACCOs to sustain the fund and processing compensation claims when a SACCO’s licence or authorization is revoked.
It will also have powers to inspect SACCOs to determine the type, number and value of protected deposits and may decline compensation to individuals found to have contributed to or benefited from circumstances that led to a SACCO’s insolvency.
The bill also proposes a new Section 57A, which provides that no member of the Board, officer or employee of the Fund shall be held personally liable for any act or omission committed in the course of performing their functions under the Act, provided they acted in good faith.
However, the provision does not exempt the Deposit Guarantee Fund itself from liability to compensate for injury to persons or damage to property arising from the exercise of its powers.
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