A legislative proposal, the Sacco Societies (Amendment) Bill 2025, is set to be tabled in the National Assembly with the objective of initiating extensive reforms to the Sacco Societies Act, Cap 490B. This bill, sponsored by the Leader of the Majority in the National Assembly, comes on the heels of the recent Ksh 15.0 billion unravelling of the Kenya Union of Savings and Credit Cooperatives (KUSCCO), highlighting the urgent need for regulatory improvements in the cooperative sector.
Key Reforms Proposed
The amendment seeks to modify nine critical clauses to enhance governance, strengthen regulatory oversight, and modernize service delivery within Saccos. Among the notable proposals:
– Establishment of Secondary Sacco Societies: The bill introduces legal recognition for secondary Sacco societies, which are intended to offer shared services and central liquidity support to primary cooperatives. This move aims to bolster financial collaboration and efficiency within the cooperative landscape.
– Introduction of New Definitions: To eliminate ambiguity, new definitions, including Central Liquidity & Shared Services, Liquidity Reserve Account, and Secondary Cooperative Society, will be added to the Act. This redefinition is essential for clarifying the roles and responsibilities of different entities involved in the cooperative sector.
– Expanded Oversight for SASRA: The Sacco Societies Regulatory Authority (SASRA) will be granted expanded powers to license, regulate, and supervise secondary Sacco societies, ensuring better risk management and transparency.
Regulatory Framework and Governance
The bill seeks to modernize the operational framework for secondary Saccos, requiring them to adopt a mandatory code of conduct and rules of governance. Violations of these provisions could result in fines of up to Kes 3.0 million or imprisonment for up to five years, or both.
Additionally, the bill includes an amendment to the Deposit Guarantee Fund (DGF) governance structure. It proposes the removal of the Commissioner or their representative from the Board of Trustees and instead mandates the inclusion of the Principal Secretary in charge of Saccos, along with independent board members, to enhance representation and governance.
Protecting Stakeholders and Streamlining Processes
The proposed changes also include provisions aimed at protecting trustees, employees, and agents of the DGF from personal liability for actions taken in good faith, thereby fostering accountability while safeguarding their interests.
Furthermore, the bill seeks to simplify the claims process for depositors in the event of Sacco license revocation, establishing clear procedures for making claims to the DGF. This streamlining is expected to improve the overall responsiveness and effectiveness of the cooperative support framework.
The Sacco Societies (Amendment) Bill 2025 represents a strategic step towards reforming the cooperative sector in Kenya. By enhancing regulatory frameworks, improving governance structures, and fostering greater accountability, the proposed amendments aim to create a more resilient and efficient cooperative environment that can better serve its members and withstand future challenges. The successful passage of this bill could pave the way for a stronger and more unified cooperative movement in the country
