The Cabinet has approved important amendments to the SACCO Societies Act of 2008 to bolster the stability, efficiency, and competitiveness of Kenya’s Savings and Credit Cooperative Organizations (SACCOs). This move follows a significant Kshs 13.3 billion fraud scandal that has raised serious concerns in the sector. In response, the Kenya Union of Savings and Credit Cooperatives (KUSCCO) has decided to sell its insurance subsidiary, KUSCCO Mutual Assurance, and auction off properties linked to defaulters.
The scandal, allegedly involving former KUSCCO officials, has prompted authorities to pursue legal action to recover lost funds and to implement restructured operations for better accountability.
“To enhance these regulatory reforms, the government will establish a committee of experts to review the SACCO Societies Act. A new board will also be appointed to supervise the revival of KUSCCO,” Dr. Wycliffe Oparanya, the Cabinet Secretary for Cooperatives and Micro Small Medium Enterprises (MSMEs) stated.
The reforms outlined in the SACCO Societies Act Amendment Bill 2023, which is currently before Parliament, aim to modernize financial and technological operations in the sector. Key highlights include:
– SACCO Shared Service Framework: This initiative will enable SACCOs to pool resources and adopt fintech solutions, facilitating collaboration while preserving operational independence.
– Central Liquidity Facility: This will aid inter-SACCO transactions, provide short-term lending, and enable participation in the National Payment System.
– Centralized Data Repository: Aimed at enhancing regulatory oversight and efficiency across the sector.
– Reforms to the Deposit Guarantee Fund: These changes will better protect SACCO deposits, reduce the risks of government bailouts, and strengthen the cooperative financial sector.
By lowering operational costs, promoting innovation, and boosting public confidence, these reforms position SACCOs as vital contributors to Kenya’s financial inclusion and empowerment initiatives.
