Oparanya Warns: Non-Compliant Cooperatives Risk Deregistration

The future of Kenya’s cooperative sector has been put under the spotlight as Cooperative and MSME Development Cabinet Secretary Wycliffe Oparanya issued a firm directive to all cooperative societies, unions, national cooperative organizations, and apex cooperatives. He warned that those failing to comply with the mandatory requirement of filing annual returns by the end of April 2025 will face deregistration — a move that would see them struck off the Cooperative Register and lose their corporate status.

This directive came during an Ethical, Leadership, and Governance forum convened for cooperative leaders in Naivasha by the Cooperative Alliance of Kenya (CAK). The forum brought together influential cooperative heads, government officials, and sector stakeholders to deliberate on pressing issues affecting cooperatives nationwide.

The Legal Imperative: Filing Annual Returns

CS Oparanya underscored that under the Cooperative Societies Act, every cooperative is legally required to file annual returns on or before April 30 each year. These returns must be comprehensive, including duly approved audited financial statements for the relevant year, as well as updated records of all elected officials and the Chief Executive Officer — complete with full names, physical addresses, telephone numbers, and email contacts.

“Unfortunately, we have observed a worrying trend where an increasing number of societies are failing to meet this legal obligation, thereby exposing themselves to the risk of deregistration,” he stated. He further emphasized that societies failing to file returns for three consecutive years within the stipulated timeframe will be struck off immediately.

This firm stance signals the government’s resolve to clean up the cooperative sector by holding entities accountable, ensuring only compliant and well-managed cooperatives remain operational.

Why Compliance Matters: Institutional Integrity and Public Trust

The cooperative movement in Kenya is a crucial pillar of economic development, financial inclusion, and social empowerment. With over 31,000 cooperatives registered, primarily Savings and Credit Cooperative Organizations (SACCOs), the sector plays an essential role in providing accessible financial services to millions of Kenyans often excluded from formal banking.

Cooperatives contribute approximately 35% of Kenya’s Gross Domestic Product (GDP), demonstrating their significant economic footprint. They are also central to the Government’s BETA Plan (Building Entrepreneurial Talent and Aspirations), which aims to empower grassroots communities by creating jobs, alleviating poverty, and promoting equitable wealth distribution.

However, the sector has faced numerous challenges over the years — from financial mismanagement, weak governance frameworks, and corruption, to declining public confidence. These issues have led to the closure of several SACCOs, disenfranchisement of members, and skepticism about cooperatives' ability to deliver on their mandate.

CS Oparanya recognized these challenges, saying: “We are witnessing the erosion of public trust as cooperatives falter due to poor management and governance failures. The consequences are severe, as communities that rely on these institutions are left disillusioned and marginalized.”

Governance Reforms: The Cooperatives Bill, 2024

To address these systemic issues, the Ministry of Cooperatives and MSME Development has spearheaded the development of the Cooperatives Bill, 2024, which is currently before the Senate. This proposed legislation is poised to overhaul the sector’s governance landscape by introducing stringent measures designed to enforce transparency, accountability, and ethical leadership.

The bill proposes higher educational and competency standards for cooperative leaders, ensuring that those in charge possess the expertise necessary to make informed and strategic decisions. It also strengthens oversight mechanisms, mandates regular independent audits, and institutes robust anti-corruption safeguards.

Oparanya noted that these reforms are aimed not just at compliance, but at building resilient institutions capable of sustaining themselves amid increasing competition from both public and private financial entities. “The Bill enforces self-regulation and introduces strict penalties for non-compliance, all aimed at restoring trust and ensuring sustainability,” he explained.

New Delegate System for Large Cooperatives

Another critical directive unveiled during the forum was the requirement for cooperatives with more than 10,000 members to adopt a delegate system for representation at general meetings. This system mandates that no more than 500 delegates represent the entire membership at such meetings.

The rationale behind this change is practical: managing meetings with thousands of members physically present has often led to chaotic, disorganized forums that impair effective decision-making. The delegate system will ensure meetings are more orderly and decisions more strategic.

However, CS Oparanya was keen to stress that representation must be inclusive and fair. Delegates should reflect the cooperative’s geographic spread, gender balance, age diversity, and include persons with disabilities. “Inclusivity is not optional — it is fundamental to cooperative success and sustainable growth,” he said.

Empowering Cooperative Leaders: Ethics and Capacity Building

CAK Chairman McCloud Malonza highlighted the imperative of stable governance and skilled leadership. “As cooperatives have grown from small, community-based groups into large institutions, the complexity of managing them has increased significantly. We must empower our leaders with the skills and ethics necessary to navigate this reality,” Malonza said.

The sector is actively investing in capacity building programs aimed at equipping leaders with knowledge in governance, financial management, product development, and competitive strategies. This is especially vital given the heightened competition from established banks and financial institutions targeting the same customer base.

Malonza emphasized that the cooperative movement’s survival and growth hinge on ethical leadership. “The leaders must be good stewards who understand the cooperative model and can drive innovation and efficiency,” he added.

The Role of Inclusivity and Sustainability

CS Oparanya also underscored the importance of ensuring women, youth, and marginalized groups have a voice in cooperative decision-making. This inclusivity is vital for driving equitable growth and unlocking the full potential of Kenya’s diverse population.

“True progress in the cooperative sector cannot be achieved without the active participation of these groups. They represent a vast pool of talent and innovation that must be harnessed,” the CS said.

The Road Ahead: Strengthening Kenya’s Cooperatives

The cooperative movement stands at a pivotal moment. With robust reforms on the horizon, the future will depend heavily on the willingness of cooperative societies to embrace change and prioritize good governance.

Nelson Kuria, Chairman of CIC Insurance Group, reminded leaders that 2025 marks the United Nations International Year of Cooperatives — a symbolic moment calling for renewed commitment to cooperative principles. Kuria challenged leaders to elevate the movement to new standards of excellence and sustainability, capable of competing with large corporations.

“The cooperative movement must be prepared to face increasing competition from both public and private sectors. This requires strategic thinking, innovation, and unwavering commitment to ethical leadership,” he said.

Conclusion

Kenya’s cooperatives have long been engines of socio-economic transformation, especially for underserved communities. However, to maintain relevance and impact in a rapidly evolving economic landscape, they must comply with legal requirements, embrace governance reforms, and foster inclusive leadership.

CS Oparanya’s warning on deregistration serves as a wake-up call — a reminder that compliance is not optional but a cornerstone for survival. As the sector gears up for the implementation of the Cooperatives Bill, 2024, and adopts the delegate representation system, cooperative leaders face the urgent task of steering their organizations towards transparency, accountability, and sustainable growth.

The choices made today by Kenya’s cooperative leaders will shape the legacy they leave for future generations — either strong, resilient institutions that empower communities or fractured systems unable to withstand modern challenges.

For a sector contributing 35% of the nation’s GDP and playing a vital role in financial inclusion, the stakes could not be higher.