Cooperatives Cabinet Secretary (CS) Opiyo Oparanya has called for urgent reforms in Kenya’s SACCO sector, urging small Back Office Services Activity (BOSA)-only SACCOs to merge or consolidate with larger, more stable entities. Speaking on Thursday during the launch of the Sacco Supervision Report 2024, CS Oparanya noted that many BOSA-only SACCOs are inactive or exist only on paper, while the few active ones struggle with limited membership and financial instability.
“We must face the reality that many BOSA-only SACCOs are inactive. The few active ones are neither financially viable nor sustainable because they serve just a handful of members,” CS Oparanya stated. He emphasized that mergers and consolidations are key to ensuring the long-term sustainability of these cooperatives.
To support the process, the Ministry of Cooperatives will issue guidelines facilitating the amalgamation of smaller SACCOs with stronger, financially stable ones.
Strengthening Governance and Compliance
The CS also outlined measures to improve governance within SACCOs. Cooperatives with over 5,000 members will now adopt a delegate system to make general meetings more effective decision-making platforms. Additionally, SACCOs will no longer be allowed to borrow externally to pay dividends. Any external loans must first receive written approval from the Commissioner and comply with regulatory standards.
CS Oparanya also questioned the sustainability of the current SACCO registration threshold, set at ten members, suggesting it may need revision to align with the modern financial environment.
Clarifying Matatu SACCOs
The CS highlighted that some transport cooperatives, including Matatu SACCOs, are not genuine SACCOs as they do not mobilize deposits or provide credit. He urged a review to streamline their operations and governance structures.
Finally, the Sacco Societies Regulatory Authority (SASRA) and the Commissioner of Cooperatives have been directed to tighten oversight on audited accounts, with financial statements to be countersigned by CEOs, finance officers, and board members, ensuring transparency and accountability across the sector.
These reforms aim to strengthen SACCOs’ financial health, improve governance, and safeguard the interests of members nationwide.
