Cabinet Secretary for Co-operatives and Micro, Small, and Medium Enterprises (MSMEs), Wycliffe Oparanya, has raised concerns over growing financial mismanagement within a few Savings and Credit Cooperative Societies (SACCOs). Speaking at the 11th Annual Leaders Convention of the Kenya Union of Savings and Credit Cooperatives (KUSCCO) in Mombasa, Oparanya warned that some SACCOs are pushing to declare interest on deposits and dividends without sufficient revenues or cash flows to support the payouts.
The Cabinet Secretary noted that such practices risk creating “non-existent surpluses,” where institutions announce returns that are not backed by actual earnings. This, he explained, can severely weaken liquidity positions and expose members’ savings to unnecessary risk. Highlighting the scale of compliance gaps within the sector, he revealed that out of 69 SACCOs recently subjected to regulatory review, only 19 successfully completed the process.
69 SACCOs subjected to regulatory review
Despite receiving internal board approvals, several SACCOs’ requests to pay interest and dividends were rejected by regulators for failing to meet financial and regulatory thresholds. Authorities emphasized that any payout approvals must strictly align with prudential standards, which include maintaining adequate capital, sufficient liquidity, and verified surplus levels.
To safeguard financial stability, the government has instituted firm measures, such as restricting the payment of honoraria and limiting specific discretionary expenditures by SACCOs. These steps are designed to ensure that member payouts remain sustainable and are based entirely on genuine financial performance.
In light of these developments, experts advise SACCO members to proactively review audited financial statements, understand their society’s dividend policies, and track institutional compliance. Ultimately, transparent governance and realistic surplus declarations remain key to protecting member funds and maintaining public confidence in Kenya’s cooperative movement.
