NAIROBI, Kenya– The government has announced an immediate three-month suspension on the registration of new Savings and Credit Cooperative Organizations (SACCOs), a move aimed at reforming a sector currently plagued by fraud and weak regulation.
Cabinet Secretary for Cooperatives and MSMEs, Wycliffe Oparanya, said the freeze will allow for a comprehensive review of the legal and institutional framework governing SACCO operations.
He expressed concern over a growing trend where SACCOs are formed with the sole intent of defrauding unsuspecting Kenyans, particularly in the run-up to general elections.
“Some SACCOs collect money from Kenyans and this is notorious when the country is approaching the elections,” said Oparanya.
“We feel we have been lenient on a lot of fronts.”
The suspension follows a major financial scandal at the Kenya Union of Savings and Credit Co-operatives (KUSCCO).
A forensic audit by PricewaterhouseCoopers (PwC) uncovered massive fraud, revealing that SACCOs lost over Sh13.3 billion due to fraudulent bookkeeping, unauthorized withdrawals, and conflicts of interest involving top executives.
The audit disclosed that KUSCCO’s executives had inflated assets by Sh14 billion, paid fictitious dividends from member savings, and funneled Sh1.6 billion in untraceable commissions.
In a bid to restore public confidence and strengthen the SACCO sector, Oparanya unveiled a five-member Committee of Experts to review the SACCO Societies Act of 2008.
According to Oparanya, the committee will assess the relevance and effectiveness of the current legal framework and recommend reforms aligned with international standards and current sectoral needs.
Their focus will include aligning the Act with government policy directives such as the establishment of a Central Liquidity Facility for SACCOs, the creation of a SACCO Deposit Guarantee Fund, and the development of a shared services legal and administrative framework.
Likewise, the committee will analyze the current operational environment, benchmark Kenya’s SACCO model against global practices, and evaluate the administrative structures of SACCOs for efficiency and effectiveness.
The Committee of Experts includes Marlene Shiels, who will serve as Chairperson.
Other members are Advocate Maurice Smith, Gina Carter, Odhiambo Collins Harrison, and constitutional law expert Gamaliel Hassan.
Oparanya emphasized that the reforms are critical to safeguarding the interests of millions of Kenyan savers and ensuring SACCOs operate with integrity and transparency.
The government is expected to consider the committee’s findings and proposals at the end of the moratorium period to inform long-term regulatory decisions for the sector.
