Government approves SACCO reforms to protect members’ deposits
The government has approved key reforms aimed at safeguarding SACCO members’ deposits following a financial scandal at the Kenya Union of Savings and Credit Cooperatives (KUSCCO).
The scandal, which resulted in the loss of over Sh13 billion, exposed weaknesses in SACCO management and triggered urgent measures to enhance financial security and restore public confidence.
A forensic audit by PricewaterhouseCoopers (PwC) uncovered widespread financial irregularities, affecting SACCOs such as Mhasibu SACCO, Kimisitu SACCO, and the Law Society of Kenya SACCO. The report has been handed over to national security agencies for further investigation.
In response, the government has moved swiftly to implement changes aimed at strengthening oversight and ensuring SACCO members’ savings are protected.
A Cabinet dispatch outlined the objectives of the reforms, stating: “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 modernise financial and technological operations, particularly benefiting smaller SACCOs.”
The reforms introduce a shared services framework, allowing SACCOs to collaborate and adopt financial technology solutions while maintaining operational independence.
A central liquidity facility will be established to support inter-SACCO transactions, short-term lending, and participation in the National Payment System. Additionally, a centralized data repository will enhance regulatory oversight, improve transparency, and increase efficiency in SACCO management.
One of the key measures is the creation of a SACCO Deposit Guarantee Fund, designed to protect members’ deposits and reduce the risk of financial losses. This fund mirrors the deposit insurance mechanisms used in banks and insurance firms, ensuring better financial stability within the SACCO sector.
Author: Andrew Walyaula
Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com
