The government has taken a new direction to clean up the cooperative sector in Kenya after several financial scandals involving SACCOs caused public concern. On May 21, 2025, Wycliffe Oparanya, who is the Cabinet Secretary in charge of Cooperatives and MSMEs, shared a new plan that is expected to bring back discipline and trust in the SACCO space.
His ministry has started a deep review of the laws and systems that guide SACCO operations across the country. As part of this plan, a special team made up of five experts has been formed. Their main task will be to examine the SACCO Societies Act, which has not been updated since 2008.
The team will be looking into the current rules and will give suggestions on how to improve both the legal and administrative structures to match today’s needs.
To give this team room to work, all new SACCO registrations will be temporarily stopped for a period of three months. This move is expected to prevent the formation of new SACCOs that may not follow the right standards while the review process is ongoing.
In addition to this, Oparanya also led the swearing-in of a new board for the Kenya Union of Savings and Credit Cooperatives, commonly known as KUSCCO. The new board, which will serve for two years, replaces the previous interim team. Its job will be to guide KUSCCO through a restructuring process, recover lost property, and help turn it into a National Cooperative Federation with better governance structures.
The ministry’s action is largely a response to reports showing that some SACCOs had been giving false information about dividends and engaging in shady financial practices. To stop this, new policies will be introduced.
These include the formation of a Central Liquidity Facility that will support SACCOs during tough times, the setting up of a Deposit Guarantee Fund to protect the savings of members, and stronger rules on how SACCOs share services. These steps are designed to ensure that the sector operates smoothly and safely for the millions of Kenyans who depend on SACCOs.
Three months before this announcement, the Commissioner of Cooperatives David K. K. Obonyo had already raised alarm over mismanagement within several SACCOs. A major inspection followed, revealing how widespread the problems were.
This led to plans to tighten control over how SACCOs invest money, ensuring they stick to their main role of collecting deposits and offering loans. Oparanya praised the newly appointed committee and KUSCCO board, saying he believes they will help bring long-term solutions. The government hopes these changes will rebuild confidence and secure the future of the cooperative sector in Kenya.
