The government has reassured low-income cooperative societies that proposed mergers with larger SACCOs will not threaten their stability.
According to Cooperatives Principal Secretary Patrick Kilemi, the reforms aim to stabilize the sector, improve performance, and support the adoption of shared technology for more efficient service delivery.
“We are looking to improve governance within the cooperatives. We are looking at a fit and proper test where top managers of SACCOs, the CEOs, are cleared,” said Kilemi.
He added that any CEO who fails the clearance will not be eligible to serve on any SACCO board, ensuring members’ funds remain secure.
“If you are not cleared, you are not able to serve within any SACCO because of past mistakes. The point is we want to ensure that our shilling in a bank is as safe as a shilling in a SACCO by putting those controls in place,”
Proposed Mergers to Strengthen SACCO Financial Stability
The Kenya National Police SACCO Chairperson, David Mategwa, argued that smaller SACCOs will not be compelled to merge.
However, he warned that market demands may eventually drive them to join larger institutions.
Also Read: 10 Kenyan Banks Fail to Meet 2025 CBK’s KSh 3 Billion Core Capital Requirement; What It Means
David also highlighted that SACCOs will not be able to adapt, risking losing members to better-equipped societies, leaving them operationally inactive.
“People will not accept paperwork anymore. They want convenience, and technology requires numbers. Technology is not cheap, but it is necessary,” Mategwa said.
The merger is designed to ensure that SACCO board members and management make better decisions, as top banks in the country do, prudently safeguarding members’ funds and boosting confidence.
Cooperatives CS Oparanya Orders New Changes to SACCOs, With Small Ones to Merge
Earlier, the Cooperatives Cabinet Secretary, Wycliffe Oparanya, directed all SACCOs with fewer members to merge with larger ones to enhance financial stability and sustainability.
During the launch of the Sacco Supervision Report 2024, Oparanya said many small, BOSA-only SACCOs remain inactive or exist only on paper.
“We must come to the reality that there are so many BOSA-only SACCOs spread across the country, but which are inactive and only exist on paper. The few active ones are neither stable nor financially viable because they serve just a few members,” said Oparanya.
Also Read: How Much Bank Teller Earn in Co-op, Equity, NCBA, and I&M Banks
Oparanya highlighted that The Ministry plans to issue guidelines to facilitate mergers, helping smaller SACCOs secure their financial future while improving governance.
As part of the merger, the government is also introducing governance reforms to safeguard members’ savings and improve oversight.
SACCOs, with over 5,000 members, will adopt a delegate system to make general meetings more effective.
Additionally, SACCOs will not be allowed to borrow from external sources to pay dividends without the Commissioner’s written approval.
Oparanya also said the current SACCO registration threshold of 10 members will be reviewed, especially for transport and smaller cooperatives.
Follow our WhatsApp Channel and join our WhatsApp Group for real-time news updates.
