The Kenyan government has announced sweeping reforms in the Savings and Credit Cooperative (SACCO) sector aimed at protecting members’ savings and strengthening governance.
The reforms include the creation of a Deposit Guarantee Fund for SACCOs, similar to the protection offered to bank depositors.
💰 Deposit Insurance for SACCO Members
According to Principal Secretary Patrick Kilemi from the Ministry of Co-operatives and MSMEs Development, the proposed fund will operate like deposit insurance in the banking sector.
Currently, the Kenya Deposit Insurance Corporation guarantees bank deposits up to KSh 500,000 if a commercial bank collapses. The government now wants to extend similar protection to SACCO members.
This means:
Members’ savings would be partially protected if a SACCO fails.
Confidence in the cooperative sector could increase.
The risk of losing life savings due to institutional collapse would reduce.
⚖️ Stronger Oversight for SASRA
The reforms will also involve amendments to the SACCO Societies Act to strengthen the powers of the SACCO Societies Regulatory Authority (SASRA).
Planned changes include:
Giving SASRA broader supervisory authority
Introducing a “fit and proper” test for top SACCO executives
Vetting of senior managers by SASRA and the Commissioner of Co-operatives before they assume office
The government says this will address governance weaknesses and curb mismanagement in parts of the cooperative movement.
PS Kilemi indicated that within six months, the country expects a new legal framework under amendments to the SASRA Act.
👮 Police SACCO Announces KSh 4.1B Payout
The reforms were announced during the annual delegates meeting of the Police SACCO, which declared strong financial results:
17% dividend on share capital (KSh 624.3 million)
11% interest on deposits (KSh 3.5 billion)
Total payout: KSh 4.1 billion in 2025, up from KSh 3.9 billion in 2024
Despite the strong performance, the SACCO raised concerns about a slowdown in deposits.
📌 Why These Reforms Matter
SACCOs play a major role in Kenya’s economy by:
Mobilizing savings
Providing affordable credit
Supporting SMEs and households
However, cases of poor governance and financial mismanagement have exposed members to losses in some institutions.
If implemented effectively, the reforms could:
Boost public trust in SACCOs
Improve accountability
Reduce systemic risk in the cooperative sector
Align SACCO regulation closer to banking standards
