The Cabinet has approved amendments to the Sacco Societies Act, 2008, aiming to enhance financial stability and modernize operations within Kenya’s Savings and Credit Cooperatives (Saccos). The decision follows a series of financial losses that have rocked the sector in recent months.
In a statement issued after a Cabinet meeting on March 11, 2025, the government emphasized that the proposed changes will particularly benefit smaller Saccos by integrating financial and technological advancements.
“In a bid to enhance the stability, efficiency, and competitiveness of Kenya’s Savings and Credit Cooperatives (Saccos), the Cabinet has approved amendments to the Sacco Societies Act, 2008. The proposed reforms, outlined in the Sacco Societies (Amendment) Bill, 2023—now before Parliament—aim to modernize financial and technological operations, particularly benefiting smaller Saccos,” the statement read in part.
Key Reforms to Strengthen the Sacco Sector
The amendments introduce several reforms aimed at improving liquidity, operational efficiency, and financial oversight:
- Sacco Shared Services Framework – This initiative will allow Saccos to pool resources, integrate fintech solutions, and enhance collaboration, all while maintaining their operational independence.
- Central Liquidity Facility – The government proposes establishing a liquidity facility to facilitate inter-Sacco transactions, short-term lending, and allow participation in the National Payment System.
- Centralized Data Repository – A new data system will be introduced to enhance regulatory oversight, improve transparency, and ensure efficient operations.
- Deposit Guarantee Fund Reforms – Enhancements to the Deposit Guarantee Fund will protect Sacco members’ savings, reduce government bailout risks, and strengthen Kenya’s cooperative financial sector.
According to the Cabinet, these changes will lower operational costs, promote financial innovation, and boost public confidence, positioning Saccos as key players in Kenya’s financial inclusion and economic growth agenda.
Kuscco Under Scrutiny Amid Ksh5.3 Billion Losses
These reforms come at a time when the Kenya Union of Savings and Credit Cooperatives (Kuscco) is under investigation for losing up to Ksh5.3 billion due to bad loans issued to Saccos and senior officials.
Some of the hardest-hit Sacco societies include:
- Mhasibu Sacco – Facing a loss of over Ksh480 million
- Kimisitu Sacco – Expected loss of over Ksh353 million
- Law Society of Kenya Sacco – Ksh19 million lost
- Stima Deposit Taking Sacco – Ksh108 million in losses
- Balozi Sacco Society – A loss of Ksh437.5 million
Several affected Saccos have already written off their deposits with Kuscco, a move that has significantly impacted their members’ savings.
Government Takes Action to Combat Corruption
In response to the financial crisis, Cooperatives Cabinet Secretary Wyckliffe Oparanya announced a comprehensive audit of all cooperative societies to uncover financial mismanagement and bring corrupt Sacco officials to justice.
“The government is implementing decisive measures to address financial mismanagement. Individuals found culpable will be held accountable through the available legal and administrative framework,” Oparanya stated last month.
As the Sacco Societies (Amendment) Bill, 2023 moves through Parliament, all eyes will be on how these reforms impact financial stability, member confidence, and the overall growth of the cooperative sector in Kenya.
