By News Desk
The Cabinet Secretary for Co-operatives and MSME Development, Wycliffe Oparanya in Mombasa County
The Cabinet Secretary for Co-operatives and MSME Development, Wycliffe Oparanya, has unveiled proposals aimed at strengthening Kenya’s Savings and Credit Cooperative Organizations (SACCOs), including the introduction of a liquidity support mechanism similar to “Fuliza” to stabilize struggling institutions.
Speaking on the future of the cooperative movement, CS Oparanya emphasized the need for innovative financial solutions that would allow SACCOs facing short-term liquidity challenges to access structured emergency funding.
The proposed facility, informally referred to as “Fuliza for SACCOs,” would help prevent operational disruptions and protect members’ savings.
The CS also highlighted the importance of consolidating and uplifting smaller, Tier One SACCOs and ensuring that SACCOs with excess funds are properly regulated to safeguard investments and maintain public confidence.
He proposed enhanced oversight, including stronger collaboration with the Central Bank of Kenya, particularly for deposit-taking SACCOs engaged in complex financial activities.
“The SACCO sector must be strong, stable, and well-regulated to contribute more effectively to Kenya’s economic growth,” Oparanya stated.
Recommendations by the Committee on SACCO Reforms Following concerns over governance gaps and financial instability within sections of the SACCO sector, the Committee has proposed the following key reforms:
1️⃣ Governance StrengtheningEnforce strict fit-and-proper tests for board members and senior management.Introduce mandatory leadership training and certification for SACCO officials.Strengthen internal audit committees and risk management frameworks.Limit excessive or unjustified official travel and administrative spending.
2️⃣ Regulatory ReformsEnhance collaboration between SACCO regulators and the Central Bank of Kenya.Review and update cooperative laws to align with modern financial standards.Require full compliance with prudential guidelines for deposit-taking SACCOs.Enforce stricter penalties for non-compliance and financial mismanagement.
3️⃣ Member Education & Transparency Launch nationwide financial literacy programs for SACCO members.Require regular, simplified financial disclosures to members.Encourage member participation in Annual General Meetings (AGMs).Promote whistleblower protection mechanisms within cooperatives.
4️⃣ Consolidation & RebrandingEncourage mergers among smaller or struggling SACCOs to enhance stability.Support restructuring plans for weak institutions before collapse.Promote sector-wide rebranding to restore public trust and confidence.Develop stronger brand identity positioning SACCOs as secure financial institutions.
5️⃣ Deposit Protection & Liquidity ManagementStrengthen deposit insurance mechanisms to protect members’ savings.Establish a liquidity support framework for SACCOs facing short-term cash flow challenges.Ensure all deposits are held in properly regulated financial institutions.Introduce stricter oversight on external investments and inter-SACCO lending.
ConclusionThe Committee maintains that these reforms are not punitive but corrective and protective.
If fully implemented, they aim to stabilize the SACCO sector, restore member confidence, and position cooperatives as a stronger contributor to Kenya’s economic growth.
Kenya’s SACCO movement is one of the largest in Africa, mobilizing billions in savings and providing credit access to millions of members.
The government now seeks to modernize the sector, improve governance standards, and align regulatory frameworks with evolving financial risks.
In addition, the CS raised concerns over governance and accountability within some cooperative societies. He stressed that official travel by SACCO leaders and executives should be justified, transparent, and aligned with members’ interests to ensure prudent use of members’ funds.
The reforms are expected to spark national conversation among SACCO members, regulators, and financial stakeholders on the best path toward safeguarding the cooperative model while promoting innovation and economic expansion.
Further stakeholder consultations are anticipated as the Ministry refines its proposals.
