President William Ruto’s Cabinet has approved various changes to the Savings and Credit Cooperatives (SACCOs) Act.
A dispatch from the cabinet dated Tuesday, March 11, noted that these amendments will enhance stability, efficiency, and competitiveness in SACCOs.
According to the cabinet, the proposed reforms outlined in the Sacco Societies (Amendment) Bill, 2023—now before Parliament—aim to modernize financial and technological operations, particularly benefiting smaller SACCOs.
The key reforms include the implementation of a SACCO Shared Services Framework.
This will enable financial institutions to pool resources, adopt financial technology (Fintech) solutions, and foster enhanced cooperation.
Despite this collaboration, each SACCO will still operate independently, meaning they will retain their separate management, decision-making, and internal processes.
Also Read: List of SACCOs at Risk of Losing Billions After KUSCCO Heist
Cabinet Approves SACCOs Amendment Bill 2023
At the same time, the introduction of a Central Liquidity Facility will enable SACCOs to easily engage in transactions with each other, access short-term loans, and participate in the National Payment System.
Additionally, the creation of a centralized data repository will streamline regulatory oversight by providing a single, efficient system for monitoring SACCO activities.
This will also improve overall operational efficiency by allowing better data management and reporting.
The Cabinet noted that reforms to the Deposit Guarantee Fund will ensure better protection of SACCO deposits, reduce government bailout risks, and strengthen the cooperative financial sector.
“By lowering operational costs, fostering innovation, and boosting public confidence, these reforms position SACCOs as key players in Kenya’s financial inclusion and economic empowerment agenda,” the Cabinet dispatch read in parts.
This development comes amid the ongoing crisis following the insolvency of the Kenya Union of Savings and Credit Co-operatives (KUSCCO) and the revelations of primary SACCOs’ exposure to the union.
Also Read: Govt Publishes List of 345 Licensed and Authorized SACCOs in 2025
In response, the National Treasury has advertised a tender for consulting services aimed at implementing a SACCO Shared Digital Services Platform for SACCO Central Kenya.
Treasury Advertises Tender for Consultancy to Enhance SACCOs’ Digital Services
The consultancy will assist SACCOs in establishing a robust, secure, and fit-for-purpose technology platform, which will enhance operational efficiency and enable SACCOs to better manage their services.
Furthermore, the consultancy will support the development of a strategic roadmap for direct participation in the national payment system, as well as creating an instant payment system for the SACCO industry.
Additionally, the firm will play a crucial role in helping the SACCOs establish and operationalize the Business Development and Central Liquidity services.
Commissioner of Co-operatives David K. K. Obonyo, on March 3, revealed that the Ministry, along with auditors and the Interim Board, conducted a thorough inspection of KUSCCO.
One of the key discoveries was that the exaggeration of dividends was among the major financial irregularities the institution was facing.
“One of the issues has been the falsification of records. KUSCCO was trying to declare surplus dividends from losses, which was wrong,” Obonyo said.
“We have identified the root cause of the problem. We have issued a circular to regulate the issuance or declaration of dividends on the interest on deposits. That alone will cap exaggerated dividends.”
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