The government has ended its moratorium on the registration of new Savings and Credit Cooperative Organisations (SACCOs), replacing it with more stringent requirements designed to rebuild trust, improve oversight, and guarantee that only financially sound institutions join the sector.
Co-operative Development Commissioner David Obonyo made the announcement at the launch of preparations for this year’s International Co-operative Day. He explained that the temporary ban, imposed in May last year, had given a specially formed technical committee time to conduct a thorough review of the legal and regulatory framework under which SACCOs operate.
The freeze had been prompted by governance breakdowns at a number of institutions — including Kuscco, Metropolitan SACCO, and Ushuru SACCO — which laid bare serious weaknesses within the sector.
“We felt as a ministry that we needed a committee of experts to review the legal framework of SACCOs in this country,” Obonyo said.
That committee, which drew on expertise from both Kenya and abroad, has now delivered its findings, enabling registrations to proceed under a more rigorous set of conditions.
Minimum Capital and Operational Thresholds
Prospective SACCOs must now show proof of at least Sh1.2 million in operational capital before they can open their doors. This condition is meant to confirm that incoming SACCOs are adequately resourced to set up functioning structures — including office space, personnel, and equipment — without dipping into deposits made by members.
“We want SACCOs that can sustain themselves and protect members’ savings. We want to register SACCOs that are viable, stable, and likely to continue — not ones that fail to take off,” Obonyo said.
Beyond the capital requirement, new SACCOs will also be expected to show they can raise at least Sh10 million in their first year of operation — a benchmark intended to confirm they can earn enough from lending to cover their running costs.
Low Compliance Exposes Sector Weaknesses
Obonyo disclosed that while Kenya has roughly 14,000 registered SACCOs, only about 4,000 consistently submit annual returns — a compliance gap that calls into question the operational status of thousands of registered entities.
“More than a significant number of these SACCOs have not filed annual returns, meaning they may not be viable,” he said. “We want Kenyans to be sure that when they put their money into a SACCO, that money is safe.”
Delegate Model for Larger SACCOs
Obonyo also stood by the government’s requirement that SACCOs with more than 5,000 members transition to a delegate-based system for Annual General Meetings (AGMs). He noted that AGMs attended by tens of thousands of people tend to be difficult to manage and rarely allow for substantive member input. The proposed approach would see members engage at the local level first, then elect representatives to attend and participate in broader meetings on their behalf.
Co-operative Bill Still Being Negotiated
On the legislative front, Obonyo noted that the draft Co-operative Bill is still being negotiated between the National Assembly and the Senate, with both chambers working to resolve outstanding disagreements — among them, the question of term limits for cooperative leaders. He said he remains hopeful that Parliament will finalise the Bill before the national Ushirika Day event scheduled for July 4 at Uhuru Park in Nairobi.
This year’s International Co-operative Day will be observed under the theme “Cooperatives for a Peaceful World,” reflecting the broader contribution of cooperatives to economic inclusion, social harmony, and community resilience.
Cooperatives as an Economic Pillar
Cooperative Alliance of Kenya (CAK) CEO Daniel Marube described cooperatives as fundamental to the Kenyan economy, pointing out that around 20 million Kenyans are members of at least one cooperative or SACCO, with close to three-quarters of the population benefiting from cooperative activities in some form.
He spoke to the wide-ranging impact of cooperatives — from expanding access to affordable credit and financial services for low-income earners, to supporting housing, small enterprise growth, and agricultural development. He noted that farming cooperatives in particular continue to help smallholder farmers pool their produce, negotiate fairer prices, and contribute to national food security. Marube also called for the modernisation of the cooperative movement to draw in younger Kenyans, pointing to worker cooperatives and technology-enabled models as promising entry points.
“We want young people to see cooperatives as vehicles for economic empowerment and employment creation,” he said, noting that CAK has already begun rolling out cooperative models tailored to youth participation.
Though broadly supportive of the delegate system, Marube called on the government to prioritise member awareness and education — especially in rural communities and among agricultural cooperatives — before enforcing the change. He recommended a phased rollout spanning two to three years to allow for a smooth and informed transition. He also urged smaller SACCOs to consider merging or forming partnerships as a practical path to greater financial strength and better governance.
The reopening of SACCO registration under tighter controls represents a meaningful shift in government policy toward one of Kenya’s most vital financial sectors. With tens of millions of citizens depending on cooperatives for savings, credit, agricultural support, and enterprise financing, the renewed push for accountability, financial stability, and sound governance is poised to have a lasting impact on the future of Kenya’s cooperative movement.
