A new legislative proposal, the Sacco Societies (Amendment) Bill, 2025, is to be tabled before the National Assembly with the aim of introducing major reforms to the SACCO Societies Act, Cap 490B. The Bill seeks to amend nine critical clauses to strengthen regulatory oversight, enhance governance, and modernize service delivery within Saccos through the establishment and regulation of secondary Sacco societies, central liquidity mechanisms, and shared service frameworks.
Clause 1 of the Bill proposes the legal recognition and establishment of secondary Sacco societies. These are intended to provide shared services and central liquidity support to primary cooperatives. The clause also introduces a regulatory framework for these services, including a code of conduct that secondary Saccos must adhere to in providing centralized financial solutions and operational support to member institutions.
To support these developments, Clause 2 introduces new definitions in the Act, arranged in proper alphabetical order. These definitions pertain to central liquidity and shared services, aiming to eliminate ambiguity and ensure consistency in interpreting and applying the law. This is seen as a foundational step to support the structural reforms proposed in subsequent clauses.
Clause 3 seeks to amend Section 3 of the principal Act to expand its scope to include central liquidity and shared business services. This move formally brings these emerging functions within the legal and regulatory ambit of the Sacco Societies Regulatory Authority (SASRA), ensuring adequate oversight.
Clause 4 amends Section 5 of the Act to explicitly empower SASRA to license, regulate, and supervise secondary Sacco societies and their shared services. This expansion of SASRA’s mandate is aimed at improving risk management and transparency across the sector.
A significant portion of the reform is captured in Clause 5, which proposes the insertion of a new part into the Act. This new section will provide a detailed framework for:
- The formation of secondary SACCOs
- Permitted and prohibited services
- Requirements for code of conduct and operational rules
- Licensing procedures for central liquidity and shared services
- SASRA’s power to prescribe capital and liquidity thresholds
- Offences and penalties for violations
Clause 6 addresses governance issues in the Deposit Guarantee Fund (DGF). It amends Section 56 to provide clear guidelines for the appointment and qualifications of the Chairperson of the Board of Trustees. The amendment also mandates the inclusion of the Principal Secretary to the National Treasury and matters relating to Saccos, along with four independent board members, to improve representation and governance.
Clause 7 introduces a new Section 57A to protect trustees, employees, and agents of the DGF from personal liability for actions taken in good faith in the performance of their duties. This provision is aimed at fostering accountability while protecting well-meaning officers from undue litigation.
To streamline the claims process for depositors, Clause 8 proposes to amend Section 59 to establish a procedure for making claims to the DGF in the event of Sacco license revocation. Finally, Clause 9 proposes a new Section 59A, which will provide a data framework for validating and executing claim payments from the DGF.
