The government is moving to safeguard millions of Sacco members through the establishment of a Deposit Guarantee Fund (DGF), from which depositors can claim their funds in the event that a Sacco ceases operations. This proposal is part of the Sacco Societies (Amendment) Bill, 2025, tabled in Parliament by National Assembly Majority Leader Kimani Ichung’wah.
The move follows mounting concerns over the safety of member deposits, particularly after the scandal in the Kenya Union of Savings and Credit Co-operatives, which left a Ksh 13.3 billion hole in members’ savings.
The proposed DGF will operate similarly to the deposit insurance framework used by banks, providing a safety net for members when a Sacco is liquidated or its license is revoked by the regulator. The goal is to ensure that no Kenyan loses their hard-earned savings due to the mismanagement or collapse of a Sacco and to restore trust in the cooperative movement, which has been a pillar of economic empowerment for millions.
The amendment bill also proposes the establishment of secondary cooperative societies, which will be required to obtain licenses from and be regulated by the Sacco Societies Regulatory Authority (SASRA).
Under the proposed law, SASRA will have expanded powers to regulate these secondary cooperatives, including determining capital adequacy requirements, setting operational guidelines, and monitoring liquidity management. This is in response to the glaring regulatory gaps that allowed KUSCCO to operate large-scale investment schemes without sufficient oversight.
In addition, the bill seeks to amend the principal Act to include provisions for central liquidity facilities, pooled resources that Saccos can access during times of financial distress. This mechanism is aimed at enhancing financial stability in the sector, especially for small Saccos that may face temporary liquidity shortfalls.
The Sacco Amendment Bill 2025 is currently before Parliament. If passed into law, the reforms could mark a turning point in Sacco regulation in Kenya, reinforcing accountability, boosting depositor confidence, and strengthening the resilience of a sector that holds over Ksh 1 trillion in assets and serves more than 14 million members.
