The year 2025 was a watershed moment for the Kenyan cooperative movement. Coinciding with the global celebration of the International Year of Cooperatives, the sector moved beyond ceremonial festivities to tackle deep-rooted structural challenges. From rigid government directives and policy overhauls to geopolitical shifts, the year was defined by a concerted push toward professionalization. As the dust settles, the stage is set for 2026 to be a year of radical implementation and modernized governance.
If 2025 was celebrated globally as the International Year of Cooperatives, in Kenya, it will be remembered as the year of radical surgery. From the debris of the KUSCCO forensic audit to sweeping government directives, the sector underwent a defining transformation designed to replace historical mess with corporate governance.
As the year closes, the stage is set for a defining 2026, where a new legal framework promises to professionalize a movement that controls trillions of shillings in savings.
The Death of the ‘Stadium AGM’
The most visible change witnessed in 2025 was the government’s move to end the chaotic scenes often witnessed during Annual General Meetings (AGMs) of giant Saccos. This is despite a strong opposition from a section of cooperative leaders and members.
Cabinet Secretary for Cooperatives and MSMEs Development, Wycliffe Oparanya, issued a directive requiring all cooperatives with over 10,000 members to transition to a delegate system. The rationale: direct democracy in billion-shilling institutions had become logistically impossible and financially risky.
“The law—specifically Section 27(1) of the Cooperative Societies Act—vests the supreme authority of a cooperative society in the general meeting,” Oparanya noted. “However, it is neither practical nor efficient to hold general meetings with every member present in cooperatives that have more than 10,000 members. This has often resulted in disorganized meetings and poor decision-making.”
The directive, which gave societies a nine-month window to amend their bylaws, caps representation at a maximum of 500 delegates. This shift is expected to be fully actualized in 2026.
According to the Cooperative Alliance of Kenya (CAK), the move will professionalize oversight. “The delegate system will promote order and facilitate strategic decision-making,” the Alliance stated, emphasizing that the era of mob-rule in AGMs is over.
To ensure fairness, the Ministry mandated that the selection of these 500 delegates must reflect geographical distribution, gender balance, and the inclusion of persons with disabilities.
The Legislative Overhaul
While the delegate system addressed governance, 2025 also saw a rigorous push to align the sector with the 2010 Constitution. The Co-operative Societies (Amendment) Bill, 2023 (Senate Bill No. 53 of 2023), commonly known as the Cooperative Bill 2024, gained traction and is expected to receive parliamentary approval by March 2026.
Once passed, this law will clearly define the separation of duties between National and County governments regarding cooperatives. More crucially, it introduces stringent competency standards and term limit for cooperative leaders. In 2026, the days of popularity-based elections for board directors may wane, replaced by a system requiring leaders to meet educational and expertise thresholds to manage members’ funds.
The regulatory tightening in 2025 was accelerated by a damning forensic audit by PricewaterhouseCoopers (PwC) regarding the Kenya Union of Savings and Credit Cooperatives (KUSCCO). The audit laid bare the extent of mismanagement and fraud at the umbrella body, prompting the government to tighten the noose on compliance.
In a “shape up or ship out” directive, the government ordered all cooperatives to file their annual returns or face deregistration. Invoking the Cooperative Societies Act, the state warned that any society failing to file returns for three consecutive years would be struck off the register, effectively ceasing to exist as a corporate entity.
The Cabinet also approved a robust plan to protect Sacco deposits through a reformed Deposit Guarantee Fund. This fund aims to serve as a safety net—similar to the Kenya Deposit Insurance Corporation in banking—to protect members’ savings should a Sacco collapse, reducing the risk of government bailouts.
To actualize these financial safeguards, the government appointed a high-level team of five experts to review the SACCO Societies Act of 2008. Led by Marlene Shiels, CEO of Capital Credit Union (Scotland), the team includes Maurice Smith from the US Supreme Court Bar and Dr. Gamaliel Hassan (Stima DT SACCO) and Dr. Nelson Kuria (CIC Group).
Supported by a technical team, this committee spent the latter half of 2025 drafting the legal instruments for a Central Liquidity Facility. Expected to be implemented in the near future, this facility will allow Saccos to lend to one another, enhancing liquidity across the sector.
Outlook 2026
As the sector gears up for the year 2026, the focus shifts from policy formulation to implementation. The coming year will test the efficacy of the delegate system, the strength of the new Cooperative Bill, and the resilience of smaller Saccos as they integrate into shared service platforms. Small Saccos are also required to merge to enjoy economies of scale.
Meanwhile no Sacco will be allowed to declare dividends unless it has a genuine surplus, meets capital adequacy thresholds, and has made full provisions for statutory reserves.
CS Oparanya directed SASRA and the Commissioner of Cooperatives Development to enforce these new rules strictly in 2026. This will impact how dividends and interest are distributed to members. In addition, any Sacco seeking to borrow funds externally must now obtain prior written approval from the Commissioner.
With bodies like CAK and KETSA intensifying training for leaders, the cooperative movement is shedding its traditional image for a modern, regulated, and corporate identity. If 2025 was the year of the broom, 2026 promises to be the year of the build.
