ROLE OF THE SENATE ON COOPERATIVE ISSUES
With over 15 million members and assets running into the hundreds of billions of shillings, Kenya’s savings and credit cooperative (SACCO) movement is not merely a footnote in the financial sector; it is a pillar of the national economy. Yet for years, a quiet but consequential legal question hung over this giant: when Parliament legislates on cooperatives and SACCOs, must the Senate be part of that process?
A landmark 2019 High Court ruling answered that question, and the answer carries serious implications for how laws governing millions of Kenyans are made.
The dispute arose from what might seem, on the surface, like a routine regulatory adjustment. In 2018, the Sacco Societies Regulatory Authority (SASRA) published the SACCO Societies Deposit Levy (Amendment) Order, a legal notice adjusting the annual levy that deposit-taking SACCOs pay to fund the regulator.
The Kenya Union of Savings and Credit Co-operatives (KUSCCO), an umbrella body representing primary SACCO societies, moved to court to quash the order. Their grievances ranged from alleged inadequate public participation to claims of double taxation and discriminatory treatment. Among the issues placed before Justice W. Korir of the High Court at Nairobi was a constitutional question that would prove far more consequential than the levy itself: did the Senate’s role extend beyond approving Bills affecting counties, to also cover statutory instruments like this Order?
The Court Draws the Line
Justice Korir’s answer. A statutory instrument, the court held, is a form of legislation, and treating the Senate’s role as ending at the approval of county-related Bills would impose an impermissibly narrow reading of the Constitution.
“Such an interpretation would result in the ouster of the Senate’s constitutional role in the enactment of legislation,” the court stated in its December 2019 ruling. The judge applied the doctrine of pith and substance, a constitutional tool used to determine which level of government a piece of law truly belongs to, and found that the regulation of cooperative societies falls squarely under county government functions as assigned by Part 2 of the Fourth Schedule to the Constitution.
The ruling rejected SASRA’s argument that, because it supervised the deposit-taking business of SACCOs, its regulatory role could be anchored under the National Government’s banking and financial services mandate. The court was firm: splitting the cooperative function between national and county governments would amount to subverting the constitutional design.
The Senate Question Left Open
While the ruling firmly established the principle that the Senate must be involved in statutory instruments touching on cooperative societies, Justice Korir acknowledged a practical limitation. Because neither the National Assembly, the Senate, nor the Attorney General had been joined as parties to the petition, the court could not make a definitive finding on whether the specific levy order had actually received Senate approval.
“No finding could be made on the issue in the absence of the necessary parties, as to do so would violate the right to a fair hearing,” the court noted. It was a legally cautious but telling observation, one that effectively flagged the Senate approval question as unresolved, and ripe for future litigation.
Public Participation
Beyond the Senate question, the ruling addressed what counts as genuine public participation, a recurring battleground in Kenyan administrative law. KUSCCO argued that its views, and those of member SACCOs, had been ignored in crafting the amended levy.
The court disagreed. Evidence showed that KUSCCO had been invited to and participated in all three phases of the consultation process, including two stakeholder meetings and a session before the Parliamentary Committee on Delegated Legislation.
Crucially, the court also clarified the limits of public participation: a regulatory body is not obligated to adopt every view submitted. “It was only sufficient that the opinions of stakeholders were discussed and considered,” Justice Korir held. Incorporating every submission, the court warned, would produce distorted outcomes that defeat the very purpose of the legislation.
Source: KUSCCO v SASRA [2019] KEHC 10904 (KLR), as reported in the Cooperative Financial and Sacco Law Case Digest Volume 1, published by SASRA.
