Co-operatives Cabinet Secretary Wycliffe Oparanya has announced two pivotal moves aimed at transforming the country’s Savings and Credit Co-operative (SACCO) sector.
The appointment of a Committee of Experts to review the SACCO Societies Act of 2008 and the constitution of a new Board of Directors for the Kenya Union of Savings and Credit Co-operatives (KUSCCO) signal the government’s commitment to modernizing and strengthening the cooperative movement.
These developments come at a critical juncture for Kenya’s SACCOs, which play a vital role in financial inclusion and economic empowerment for millions of citizens.
Committee to Modernize the SACCO Framework
The five-member Committee of Experts, chaired by Ms. Marlene Shiels, CEO of Scotland’s Capital Credit Union, has been tasked with a three-month mandate to overhaul the SACCO Societies Act.
The committee, which includes Advocate Maurice Smith from the African American Credit Union Coalition and Dr. Nelson Kuria, Group Chairperson of CIC Insurance Group, is expected to address longstanding challenges in the SACCO sector while aligning the legal framework with emerging trends.
The committee’s objectives are ambitious yet pragmatic. Key among them is the establishment of a Central Liquidity Facility to bolster financial stability for SACCOs nationwide. This facility could act as a buffer during liquidity crises, ensuring SACCOs remain operational and can meet members’ demands.
Equally significant is the proposal for a SACCO Deposit Guarantee Fund, a mechanism designed to protect members’ savings in the event of institutional failures—a critical step toward building trust in the sector.
Additionally, the committee will explore a shared services legal and administrative framework, which could streamline operations and reduce costs for smaller SACCOs through collaboration.
The inclusion of international expertise, such as Ms. Shiels and Advocate Smith, suggests Kenya is looking to global best practices to inform its reforms.
Locally, experts like Dr. Gamaliel Hassan, CEO of Stima DT SACCO, and Counsel Odhiambo Collins Harrison bring deep knowledge of Kenya’s cooperative landscape and legal system.
However, the three-month timeline raises questions about feasibility. Comprehensive legislative reviews, especially those involving stakeholder consultations, often require more time to ensure inclusivity and thoroughness.
The committee will need to balance speed with the need for robust recommendations that can withstand scrutiny and deliver lasting impact.
New KUSCCO Board to Drive Stability and Growth
In parallel, the Ministry has appointed a new 11-member KUSCCO Board of Directors for a two-year term, effective April 16, 2025.
This follows the successful tenure of the previous interim board, which, since May 2024, achieved significant milestones, including developing a recovery strategy, reconstructing KUSCCO’s financial records, and overseeing statutory and forensic audits.
The interim board’s efforts laid a foundation for transparency and accountability, addressing longstanding governance issues that had plagued the organization.
The new board, led by. David Mategwa, National Chairperson of the Kenya National Police DT SACCO, has been tasked with restructuring KUSCCO to enhance efficiency, recovering assets to protect cooperative members, and preparing the organization for its transition into a federation.
This last objective is particularly noteworthy, as transforming KUSCCO into a federation could decentralize its operations, giving member SACCOs greater autonomy while fostering collaboration.
The board’s composition reflects a deliberate effort to include representatives from diverse SACCOs, such as Mhasibu SACCO, Stima DT SACCO, and Unaitas SACCO, ensuring a broad range of perspectives.
The inclusion of Ms. Priscilla Maranga as a representative of the Office of the Commissioner underscores the government’s intent to maintain oversight while empowering cooperative leaders to drive change.
Implications for Kenya’s SACCO Sector
These twin announcements mark a turning point for Kenya’s SACCO sector, which serves as a lifeline for millions of Kenyans, particularly in rural and underserved areas.
SACCOs have long been a cornerstone of financial inclusion, offering affordable credit and savings options to individuals and small businesses excluded from traditional banking systems.
However, the sector has faced challenges, including governance lapses, liquidity constraints, and outdated regulatory frameworks.
The proposed Central Liquidity Facility and Deposit Guarantee Fund could address two of the sector’s most pressing issues: financial instability and member confidence.
By providing a safety net for deposits and ensuring liquidity, these mechanisms could make SACCOs more competitive with commercial banks and fintech platforms, which have increasingly encroached on their market share.
The transformation of KUSCCO into a federation is another strategic move.
A federated structure could empower smaller SACCOs by giving them a stronger collective voice while allowing KUSCCO to focus on advocacy, capacity building, and shared services.
However, this transition will require careful planning to avoid alienating member SACCOs or creating new bureaucratic hurdles.
While the government’s reforms are promising, they are not without risks. The SACCO sector is deeply entrenched in Kenya’s socioeconomic fabric, and any changes to its regulatory or operational framework will need to be inclusive and transparent to avoid resistance from stakeholders.
The Committee of Experts must prioritize consultations with SACCO members, leaders, and other players to ensure buy-in.
For the new KUSCCO Board, the task of recovering assets and restructuring the organization will likely face legal and logistical hurdles.
Asset recovery, in particular, could stir controversy if it involves high-profile individuals or institutions. The board will need to navigate these challenges with tact and transparency to maintain public trust.
On the opportunity side, these reforms align with Kenya’s broader economic goals, including the Bottom-Up Economic Transformation Agenda, which emphasizes empowering small businesses and grassroots financial institutions.
A revitalized SACCO sector could drive job creation, entrepreneurship, and wealth distribution, particularly in rural areas.
