Committee Of Experts Review Report (february 2026): Transforming Kenyas Sacco System

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On 16th February 2026, the Committee of Experts on the Review of the SACCO Legal and Regulatory Framework presented a landmark report titled Report on Transformation of the SACCO System in Kenya. Commissioned by Hon. FCPA Dr. Wycliffe Ambetsa Oparanya, Cabinet Secretary for the Ministry of Co-operatives and MSMEs Development, the report lays out a bold and comprehensive roadmap for reforming Kenya’s SACCO sector.

Signed by the Committee chaired by Marlene Shiels OBE, the report represents one of the most far-reaching reviews ever undertaken in Kenya’s co-operative financial services landscape.

SACCOs at the Heart of Kenya’s Financial Inclusion

Kenya’s SACCO movement is one of the largest and most vibrant in Africa. With over 31,000 co-operatives — the majority being Savings and Credit Co-operative Societies (SACCOs) — and more than 7.4 million members, the sector plays a central role in mobilising domestic savings and providing affordable credit.

SACCOs have been instrumental in supporting agriculture, housing, small businesses, education, and household resilience. They are also deeply aligned with the Government’s Bottom-Up Economic Transformation Agenda (BETA), which seeks to empower grassroots communities, create jobs, and reduce poverty.

As noted by Hon. Oparanya in the report’s foreword, SACCOs are pillars of financial democracy, ensuring that development benefits reach underserved communities across Kenya.

Yet despite their impressive footprint and impact, the sector faces significant structural and governance challenges that threaten its sustainability and credibility.

Why Reform Was Necessary

The Cabinet-led review was triggered by persistent weaknesses within the SACCO ecosystem. These include fragmented regulation, governance failures, insider lending practices, duplication of institutional roles, and limited access to modern financial infrastructure.

One of the major structural issues identified is the dual regulatory system. Deposit-taking SACCOs are supervised by the SACCO Societies Regulatory Authority (SASRA), while non-withdrawable deposit and many smaller SACCOs remain under the oversight of the Commissioner for Co-operatives and county governments. This fragmented framework has created regulatory arbitrage, inconsistent supervision, and varying standards of compliance.

Governance weaknesses have also been a recurring concern. The report highlights issues such as:

  • Insider lending and conflicts of interest
  • Weak board eligibility requirements
  • Payment of dividends from borrowed funds
  • Trading of SACCO shares
  • Overlapping loan guarantees
  • Dilution of the SACCO brand

Recent governance failures within apex institutions further exposed vulnerabilities in oversight, internal controls, and risk management.

In April 2025, the Government mandated a comprehensive review to examine the legislative and regulatory framework, benchmark Kenya’s SACCO system against global best practice, and propose reforms to strengthen deposit protection, liquidity management, and governance.

The Five Pillars of Transformation

The Committee of Experts proposes a transformation roadmap anchored on five strategic pillars.

1. Regulatory Harmonisation and Prudential Oversight

A key recommendation is to bring all SACCOs under an effective and harmonised supervisory framework. The report proposes a tiered regulatory model that would gradually align all SACCOs — whether deposit-taking or not — under consistent prudential standards.

The Committee recommends expanding and reinforcing SASRA’s mandate to enable risk-based supervision, data-driven regulation, and stronger sector intelligence. Legal harmonisation between national and county jurisdictions is also critical to eliminate fragmentation and close regulatory gaps.

The ultimate goal is clear: ensure that every SACCO member in Kenya enjoys equal protection and oversight, regardless of the SACCO’s size or classification.

2. Deposit Protection and Liquidity Support

Perhaps the most transformative recommendation is the establishment of a SACCO Deposit Guarantee Fund (DGF). The proposed model would provide structured protection for member deposits, similar to protection mechanisms in the banking sector.

The preferred option is to incubate the SACCO DGF through the Kenya Deposit Insurance Corporation (KDIC), leveraging its experience and institutional capacity rather than creating a standalone entity from scratch.

In addition, the report proposes:

  • A Central Liquidity Facility (CLF) to provide liquidity support to SACCOs facing short-term cash flow stress
  • A Stabilisation Protection Scheme (SPS-K) to safeguard the sector against systemic shocks

These mechanisms aim to enhance financial stability, prevent contagion risk, and restore confidence among members.

3. Governance Reform and Professionalisation

The Committee emphasises that sustainable reform cannot occur without strong governance. It proposes:

  • A Mandatory Code of Corporate Governance for SACCOs
  • An Approved Persons Regime to vet and certify board members and senior management
  • Public registers to enhance transparency
  • Clear separation of oversight and operational roles

The reforms aim to strike a balance between democratic member representation and professional management standards.

By strengthening governance structures, the report seeks to reduce fraud, insider abuse, and weak accountability — while preserving the co-operative identity that defines the sector.

4. Digitisation and Shared Services

To modernise the SACCO system, the report calls for expanded digitisation and shared service infrastructure.

Shared services would enable SACCOs to access:

  • Core banking systems
  • Risk management tools
  • Compliance and reporting platforms
  • Credit information sharing
  • Digital member engagement systems

By pooling resources, SACCOs can reduce duplication, increase efficiency, and improve competitiveness against commercial banks and fintech institutions.

Digitisation is also seen as essential for improving transparency, enabling data-driven supervision, and supporting diaspora engagement.

5. Consolidation and Sector Strengthening

With thousands of SACCOs operating across Kenya, many small and vulnerable, the report recommends strategic consolidation and a temporary moratorium on the registration of new SACCOs.

The rationale is to:

  • Reduce fragmentation
  • Strengthen capital bases
  • Improve governance capacity
  • Protect the SACCO brand

Mergers and consolidation pathways are encouraged where necessary to build stronger, more resilient institutions capable of meeting modern regulatory and technological demands.

The report also addresses the realignment and rebranding of apex structures, particularly Kenya Union of Savings and Credit Cooperatives (KUSCCO), to eliminate duplication and improve sector coordination.

International Benchmarking

The Committee’s work was informed by extensive international benchmarking, including engagements with institutions such as the National Credit Union Administration (USA) and the Financial Services Compensation Scheme (UK).

These engagements provided valuable insights into deposit insurance models, prudential supervision, stabilisation mechanisms, and governance standards. The benchmarking exercise reinforced the need for Kenya to align its SACCO framework with global best practices while preserving its unique co-operative heritage.

Protecting the Co-operative Identity

Importantly, the report does not seek to commercialise or corporatise SACCOs into banks. Rather, it seeks to modernise the sector while preserving its core principles of member ownership, democratic control, and community empowerment.

The Committee underscores that SACCOs are not merely financial institutions — they are social and economic vehicles for inclusion and wealth creation.

Member education, public sensitisation, and stakeholder engagement are therefore critical components of the transformation agenda. The success of the reforms will depend on buy-in from SACCO boards, CEOs, regulators, policymakers, and millions of members across the country.

A Roadmap for the Future

The report concludes with a detailed implementation roadmap outlining phased reforms, legislative amendments, institutional strengthening, and capacity building.

If fully implemented, the proposed reforms will:

  • Secure member deposits
  • Strengthen governance and accountability
  • Enhance liquidity resilience
  • Improve regulatory clarity
  • Promote consolidation and sustainability
  • Restore and protect public trust

Kenya’s SACCO sector has long been a global success story in financial inclusion. This transformation agenda seeks to ensure it remains stable, modern, and globally respected for generations to come.

The Report on Transformation of the SACCO System in Kenya is not merely a policy document — it is a blueprint for safeguarding financial democracy, empowering communities, and advancing inclusive economic growth under the BETA framework.

The moment now calls for decisive action and collaborative implementation. With strong political will, sector commitment, and member participation, Kenya can build a SACCO system that is resilient, trusted, and fit for the future.