Saccos in Kenya will no longer be allowed to invest in non-core ventures, following revelations that such activities have contributed significantly to the financial instability currently plaguing the sector. Cooperatives and Micro, Small and Medium Enterprises Development Cabinet Secretary Wycliffe Oparanya made the declaration while addressing the Senate on Wednesday.
Oparanya told senators that audits conducted across the sector indicate that misdirected investments outside core functions such as savings and credit services—have undermined the financial health of many saccos. These risky ventures, often undertaken without proper risk assessments, have led to substantial losses, eroding member confidence and threatening the sustainability of the cooperative movement.
“The core mandate of saccos is to mobilize savings and extend credit to members. When they begin investing in real estate, transport, or hospitality without a proper framework, they expose themselves to significant financial risks,” Oparanya said.
The Cabinet Secretary also raised concerns over the limited capacity of the Sacco Societies Regulatory Authority (SASRA) to properly regulate the sector. According to Oparanya, most of the levies collected by SASRA are diverted to the National Treasury, leaving the regulatory body underfunded and unable to adequately monitor the over 360 licensed saccos across the country.
In a bid to restore financial discipline and strengthen governance, Oparanya urged lawmakers to fast-track the passage of the Sacco Societies (Amendment) Bill. Among its provisions is the criminalization of delayed remittance of member deductions by employers—an issue that has severely impacted sacco liquidity and operations.
He also dismissed suggestions for a government bailout of struggling saccos, insisting that such institutions must instead take responsibility and consider liquidating non-performing assets. “Bailing out mismanaged saccos would set a dangerous precedent,” he said. “They must explore options like asset liquidation to pay members and stabilize operations.”
Oparanya’s remarks come at a time when the sacco sector, which serves millions of Kenyans, is under pressure to reform and regain public trust. The new measures aim to re-align the industry with its founding principles of mutual benefit, savings, and prudent lending.
