Government tightens oversight on Saccos to safeguard members' deposits

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The Government has reaffirmed its commitment to implementing stringent reforms in the cooperative movement to protect members’ savings and strengthen governance structures.

Cooperatives Principal Secretary Kiburi Kilemi said a raft of laws and policy proposals currently before Parliament and at the ministerial level are set to introduce critical changes to steer the sector in the right direction.

Speaking at Harambee Sacco’s Annual Delegates Meeting in Nairobi, Kilemi noted that past challenges faced by institutions such as KUSSCO and Metropolitan Sacco had prompted the ministry to tighten oversight, particularly in leadership, to ensure accountability and alignment with members’ interests.

Among the key measures proposed is the auditing of trips undertaken by Sacco boards.

The PS raised concerns that some societies misuse members’ funds on frequent outings, at times engaging in questionable arrangements with travel companies.

He further directed that top-tier Saccos must adhere to high auditing standards by engaging reputable auditing institutions to guarantee transparency and protect members’ investments.

Kilemi, alongside Commissioner for Cooperatives David Obonyo, also cautioned Saccos against manipulating financial records to declare attractive dividends, warning that such practices could lead to long-term instability.

They urged cooperative societies to adopt sustainable growth strategies while prioritizing the welfare of their members. Additionally, Saccos were encouraged to embrace peer learning locally instead of incurring high costs on international benchmarking trips.

The Government also challenged Saccos to operate within their financial capacity, warning against excessive borrowing to meet member demands, which could strain repayment abilities.

In a further push for reform, Kilemi called for a shift in lending practices, encouraging Saccos to offer loans at reasonable, single-digit interest rates.

At the same time, he revealed that awards would be introduced in October to recognize institutions prioritizing affordable credit for members.

The Sacco announced a Sh 2.8 billion dividend payout to members, translating to a 9.1 per cent return, up from 9 per cent last year. Its revenue rose by over Sh 1 billion, from Sh 6 billion in 2024 to Sh 7 billion.