The Ministry of Co-operatives and MSMEs Development, led by Cabinet Secretary Wycliffe Oparanya, unveiled new rules on September 25 to strengthen SACCO operations in management and lending.
Speaking during the official launch of The Sacco Supervision Report 2024, Oparanya said the measures aim to enhance accountability and protect members’ savings.
Government Directive
The Ministry directed SACCOs with over 5,000 members to adopt the delegate system, ensuring that general meetings serve as forums for effective decision-making.
Additionally, SACCOs shall not be allowed to borrow from external sources to pay dividends.
As a result, any SACCO intending to procure an external loan must obtain written approval from the Commissioner, subject to compliance with the prescribed ratios.
“No SACCO shall be allowed to borrow from external sources to pay dividends, and henceforth any SACCO intending to procure an external loan must obtain written approval from the Commissioner, subject to compliance with the prescribed ratios,” Oparanya said.
Oparanya directs SASRA
The ministry also directed SASRA and the Commissioner of Co-operatives to tighten oversight of audited SACCO accounts.
He ordered that all financial reports and statements be countersigned by the Chief Executive Officers and Finance Officers who prepare them, alongside the Board of Directors, to ensure shared accountability.
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Internal auditors must also provide their opinions on financial statements before the documents are sent for external auditing.
The CS further instructed action against external auditors who fail to meet standards set in the SACCO Societies Act and Regulations, including referring them to ICPAK for possible sanctions.
Transport Cooperatives Flagged as SACCOs
Oparanya raised concerns over the misclassification of Transport Cooperatives as SACCOs.
The CS also highlighted concerns over several Transport Cooperatives currently registered or operating, such as Matatu or PSV SACCOs.
These entities do not meet the definition of a true SACCO, as they are not engaged in mobilising deposits or providing credit to members.
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Instead, they operate as associations of individuals managing transport businesses or routes in compliance with the National Transport Safety Authority (NTSA).
“While these groups may carry the SACCO label, they do not perform the financial intermediation role that defines a regulated SACCO,” CS Oparanya said.
Additionally, his Committee of Experts is expected to revisit the current registration thresholds for SACCOs, which are currently capped at just ten members.
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