The Ministry of Co-operatives and MSMEs Development has received a landmark report from a Committee of Experts outlining a radical overhaul of the SACCO sector to enhance stability and member protection.
The report, commissioned in April 2025, proposes a comprehensive roadmap anchored on five pillars of reform. Central to these recommendations is the establishment of a robust financial safety net, including a Deposit Guarantee Fund (DGF) under the Kenya Deposit Insurance Corporation (KDIC), a Central Liquidity Facility (CLF), and a Stabilisation Protection Scheme (SPS-K) to protect member savings and ensure institutional liquidity.
To address the risk posed by over 5,000 unregulated entities, the Committee advocates for regulatory harmonization, proposing that the Sacco Societies Regulatory Authority (SASRA) receive an expanded mandate to oversee all SACCOs under a unified framework. Furthermore, the report recommends a moratorium on the registration of new SACCOs until these stringent new rules take effect.
Governance reform is another priority, with the Committee proposing a Mandatory Code of Corporate Governance and an Approved Persons Regime. These measures aim to eliminate “insider lending” and “politicized boards” by enforcing strict “fit-and-proper” criteria for all cooperative leaders.
Technologically, the roadmap pushes for a shared services platform—integrating SACCO Central, Cooptech, and KETSA—to grant SACCOs access to the National Payment System and reduce operational costs. To build long-term resilience, the Committee encourages institutional consolidation through mergers and a strategic rebranding of regulated SACCOs as “Credit Unions” to align with global standards.
“These reforms will build a SACCO sector that is modern, stable, and globally respected,” the report notes“These reforms will build a SACCO sector that is modern, stable, and globally respected,” the report notes, emphasizing that the proposals are designed to restore member trust and position the sector as a professional driver of Kenya’s economy. The Ministry is now expected to begin the legislative process to implement these priority recommendations.
