The Co-operative Alliance of Kenya(CAK), a powerful lobby group for Savings and Credit Co-operative Societies (Saccos), has unveiled a Co-op Tech platform, a financial technology firm, to facilitate inter-lending among Saccos.
This firm, worth Ksh 800 Million and owned by CAK, will have Saccos as its shareholders and is a cash management system that will also secure Sacco depositors’ funds. The firm will also play a significant role in stemming electronic fraud to protect people’s money in Saccos.
The Cabinet Secretary in charge of Co-operatives and Medium, Small and Medium-Sized Enterprises(MSMEs) Development, Simon Chelugui, said the Co-op Tech mechanism would guarantee the protection of depositors’ money in Saccos and reassure them of the security of their money in accounts.
Saccos will own the firm by purchasing shares with large-tiered Saccos expected to pay a one-time payment of up to Ksh10 million, while the small Saccos would pay between Ksh350,000 and Ksh500,000.
According to CAK, Saccos spend up to Sh1.5 billion annually on various service providers who give them a technology platform to safeguard members’ savings.
Daniel Marube, CAK’s Chief Executive Officer, noted that the new platform would help save money that Saccos can use to offer competitive interest rates on loans.
The new technology aims to make essential banking services accessible to co-operative organizations that have struggled to generate the significant budget required to buy and operate flexible transaction systems that prevent fraud.
“The common transaction platform would improve reliability and cyber security and make services affordable, similar to those in the banking sector,” Mr. Marube said. A unified money management system that facilitates inter-Sacco lending is integrated into the platform.
According to an internal memo sent to the Ministry, seen by this publication, CAK has been pushing to set up an inter-lending facility to allow Saccos to access cheaper credit from among themselves.
The lobby urges the Government to intervene and boost funding for Saccos facing liquidity problems by allowing them to directly handle retirees’ pension payments rather than through commercial banks and other channels.
The launch of the Co-op Tech platform comes when the Government plans to channel a micro-credit product of the Hustler Fund through Saccos, which will disburse cash of between KSh 10,000 to a maximum of KSh 200,000 at a repayment rate of 7%.
Mr. Chelugui, who unveiled Co-op Tech in March this year, said the plan was a long way coming and whose development had been in the works. He said Co-op Tech would protect the money of Sacco depositors.
Saccos contribute significantly to the mobilization of savings and deposits from their members with a view to intermediate the same on behalf of their members. Such intermediation may include investments, saving solutions, and the provision of credit, among other financial services solutions.
The most visible types of Financial Co-operatives are the Saccos, Housing Co-operatives, and Investment Co-operatives.
CAK has been urging Saccos to mitigate the risks associated with the lending business by reviewing their guarantors’ mechanisms and debt collection methodology.
 Saccos are regulated by Sacco Societies Regulatory Authority (SASRA). In 2022, there were 175 DT Saccos and 185 non-deposit-taking Saccos duly authorized to undertake the specified non-deposit-taking Sacco business in Kenya as provided in the Act and the said Regulations, 2020.
CAK said the low technology uptake in Co-operative Societies has long inhibited the sector from exploiting its potential. In many small and medium co-operatives, the majority are unable to pay the full cost for suitable and sustainable technology.
Limited ICT knowledge by industry players has led to vulnerability as software vendors take advantage of co-operatives, exposing them to the risks of cybercrimes. And limited skills in the industry mean co-operatives cannot effectively manage IT resources since most of them are unable to recruit, train and retain qualified professionals.
The lack of optimal technology uptake among co-operatives has led to operational inefficiencies meaning co-operatives cannot compete effectively against more efficient players such as commercial banks and Fintechs.
Saccos also suffer the loss of membership, especially the youth to Commercial banks and Fintechs who are more tech-savvy.
Co-op Tech is thus expected to provide a shared Core Banking and Digital platform for all Saccos to allow for better connectivity among Saccos and the operationalization of a Central Liquidity Fund (CLF) that will allow for inter-Sacco lending and inclusion of Saccos in the National Payment System.
 In an increasingly technological world, Co-operatives stand to unlock various opportunities, including increased efficiency leading to improved customer service and satisfaction and ultimately increased incomes.
Technology Uptake in Co-operative Societies
Even with the great advancements in the Co-operative movement, there remains a relatively low uptake
of technology inhibiting the sector from exploiting its potential mainly due to the prohibitive cost of technology. Many small and medium co-operatives, who are the majority, are unable to pay the full fee for suitable and sustainable technology
The provision of a shared Core Banking and Digital platform for all Saccos will allow for the following:
- Better connectivity among Saccos
- Standardization of services
- Operationalization of a Central Liquidity Fund (CLF) allowing for inter-Sacco lending and inclusion in the National Payment System
- Ease of application, processing and management (reporting and traceability) of financial inclusion
- Ease of transfer of shares between members
Connecting Saccos to a shared payments system that allows for mobile payments and is integrated with a national payments system is one of the key areas in measuring the global digitization of co-operatives, according to the World Council Challenge 2025.
