Sacco Leaders Push For Sector-specific Reforms To Protect Kenyas Cooperative Identity

By Admin Thursday, 14^th May 2026

The cooperative movement in Kenya has once again demonstrated its determination to protect the unique identity and operational framework of Savings and Credit Cooperative Societies (SACCOs), following renewed debate over the proposed Sacco Societies (Amendment) Bill currently before Parliament. During a high-level engagement with the National Assembly’s Departmental Committee on Trade, Industry and Cooperatives, leaders from across the cooperative sector called for substantial revisions to the bill, warning that certain provisions could fundamentally alter the nature of Kenya’s SACCO model if left unaddressed.

The meeting, held at Parliament Buildings on Wednesday, May 13, 2026, brought together legislators, principal secretaries, technical experts, and leaders from the cooperative movement to deliberate on the future of SACCO regulation in Kenya. The session was chaired by Hon. Bernard Masaka, CBS, Member of Parliament for Ikolomani Constituency and Chairperson of the Departmental Committee on Trade, Industry and Cooperatives.

The Co-operative Alliance of Kenya (CAK), the apex body representing the cooperative movement in Kenya, was represented by its Chief Executive Officer, Daniel Marube, who presented a comprehensive memorandum outlining the sector’s concerns and recommendations regarding the proposed legislation.

At the centre of the discussions was a broader concern among SACCO leaders that the bill, although intended to strengthen stability and enhance oversight, risks importing banking-style regulatory structures into a sector that has historically thrived under a cooperative-centered model. Stakeholders maintained that Kenya’s SACCO movement has developed successfully because of its distinct identity, member-driven governance, and savings-based structure, all of which require protection through sector-specific legislation.

Defending the SACCO Identity

One of the strongest positions advanced by the Co-operative Alliance of Kenya concerned the proposed use of the term “Credit Union” within the bill. According to the Alliance, the terminology fails to accurately reflect the operational nature of Kenyan SACCOs and could dilute the identity that has defined the movement for decades.

The CAK argued that SACCOs in Kenya are fundamentally savings-and-credit institutions, unlike some international cooperative financial models that focus primarily on lending. The inclusion of the term “Credit Union,” they warned, places excessive emphasis on the credit function while overlooking the critical role of savings mobilization that forms the foundation of the SACCO movement.

The Alliance therefore called for the complete removal of the term from the bill, insisting that any legal framework governing the sector must preserve the historical and operational realities of Kenya’s cooperative system.

The issue of identity emerged repeatedly throughout the discussions, with sector leaders emphasizing that SACCOs are not commercial banks, nor are they microfinance institutions. Instead, they are member-owned financial cooperatives built on principles of mutual support, democratic participation, and shared economic empowerment.

Stakeholders noted that Kenya’s SACCO movement has grown into one of the strongest cooperative financial sectors in Africa precisely because it has remained rooted in cooperative principles rather than purely commercial objectives. Leaders warned that introducing terminology or regulatory structures borrowed from other financial systems could undermine public trust and weaken the distinct value proposition that SACCOs offer to millions of Kenyans.

Concerns Over Regulatory Convergence

A major point of contention during the parliamentary engagement was the proposed alignment of SACCO regulation with frameworks traditionally used for commercial banks and deposit-taking financial institutions.

Several cooperative leaders strongly opposed what they described as attempts to subject SACCOs to inappropriate regulatory standards that fail to appreciate the sector’s operational realities.

Among the most vocal participants was Solomon Atsiaya, Chief Executive Officer of Kenya National Police SACCO, who questioned the wisdom of adopting regulatory models that have constrained other financial sectors.

Atsiaya argued that SACCOs have demonstrated resilience, sustainability, and strong performance under the current sector-specific approach. According to him, applying rigid banking regulations to SACCOs could reduce operational flexibility, increase compliance costs, and ultimately weaken institutions that have consistently delivered value to their members.

He challenged lawmakers to protect a model that has already proven effective rather than replacing it with frameworks designed for entirely different financial systems.

His remarks reflected a broader sentiment within the cooperative movement that the Sacco Societies Regulatory Authority (SASRA) should remain the principal regulator for the sector and be strengthened where necessary instead of introducing overlapping regulatory mechanisms.

Sector leaders emphasized that SASRA already possesses institutional understanding of SACCO operations, governance structures, and risk dynamics. Therefore, rather than transferring or duplicating responsibilities under banking-oriented structures, Parliament should empower SASRA with adequate tools and resources to supervise the sector more effectively.

Debate Over the Stabilisation Protection Scheme

Another key issue raised during the deliberations was the proposed Stabilisation Protection Scheme intended to safeguard the financial stability of SACCOs.

While the cooperative movement acknowledged the importance of creating mechanisms to protect members and strengthen confidence in the sector, stakeholders expressed concern over how the scheme would be funded and administered.

The Co-operative Alliance of Kenya recommended that the Stabilisation Protection Scheme be operated directly by SASRA to ensure it remains aligned with the operational realities of SACCOs. The Alliance also proposed a diversified funding structure that would reduce the financial burden placed on SACCO members.

According to the CAK, the scheme should not rely exclusively on contributions from SACCOs themselves. Instead, the funding architecture should incorporate alternative revenue streams, including industry penalties and private capital participation.

The Alliance argued that excessive levies on SACCOs could ultimately be transferred to ordinary members, reducing member value and weakening smaller community-based societies that already operate under tight financial margins.

This concern was particularly significant for smaller SACCOs operating in rural and underserved communities. Many of these institutions play a critical role in advancing financial inclusion, especially among farmers, informal sector workers, teachers, and community groups that may not easily access conventional banking services.

Sector leaders cautioned that abrupt regulatory costs or excessive financial obligations could destabilize smaller societies and limit their ability to continue serving vulnerable populations.

Opposition to Integration with KDIC

The proposed Deposit Guarantee Fund also emerged as a major area of debate during the parliamentary session.

The Co-operative Alliance of Kenya firmly opposed any attempt to merge the SACCO guarantee mechanism with the Kenya Deposit Insurance Corporation (KDIC), which currently serves the banking sector.

According to the Alliance, SACCOs differ fundamentally from commercial banks in terms of ownership structure, operational philosophy, and governance systems. Integrating SACCO protection mechanisms into KDIC structures, they argued, could compromise the autonomy and member-centered nature of the cooperative movement.

The CAK maintained that SACCOs require a dedicated protection framework specifically designed around cooperative principles and sector realities. Leaders warned that adopting bank-oriented insurance models may inadvertently subject SACCOs to policies and operational requirements that conflict with cooperative governance traditions.

The cooperative movement emphasized that member ownership is central to the SACCO model. Unlike commercial banks that prioritize shareholder returns, SACCOs exist primarily to improve the social and economic welfare of their members. Any legislative framework, they argued, must therefore reinforce rather than weaken this distinction.

Parliamentary Committee Signals Openness to Stakeholder Input

The parliamentary committee overseeing the discussions appeared receptive to the concerns raised by the cooperative sector.

Committee Chairperson Bernard Masaka commended the organized approach adopted by cooperative stakeholders and encouraged continued engagement throughout the legislative process.

He acknowledged the importance of incorporating expert and stakeholder perspectives to ensure the bill ultimately delivers a robust, practical, and sustainable regulatory framework.

The chairperson assured stakeholders that the committee remained open to receiving additional information and recommendations that could improve the quality of the proposed law.

Importantly, he also indicated the committee’s willingness to recall the Committee of Experts to respond to technical concerns raised during the deliberations. This move was interpreted by many participants as a positive signal that lawmakers intend to carefully evaluate the implications of the bill before advancing it to the next legislative stage.

The willingness to reopen technical discussions demonstrated Parliament’s recognition of the SACCO sector’s importance to Kenya’s economy and financial ecosystem.

Push for Alignment with Expert Recommendations

The Vice Chairperson of the committee, Marianne Kitany, also played a prominent role during the proceedings.

She emphasized the need to align government proposals with recommendations already developed by technical experts and sector stakeholders. According to the vice chairperson, inconsistencies between the Committee of Experts’ findings and government presentations could create confusion and delay the legislative process.

Her intervention underscored the committee’s commitment to ensuring that the final bill is technically sound, coherent, and reflective of broad stakeholder consensus.

She further cautioned against introducing redundant or conflicting regulatory proposals that could undermine implementation efforts or create legal ambiguity.

The committee’s insistence on harmonization between technical reports and legislative proposals was welcomed by cooperative leaders, many of whom believe that previous expert consultations already produced valuable recommendations capable of strengthening the sector without compromising its identity.

The Importance of Kenya’s SACCO Sector

The intensity of the debate surrounding the Sacco Societies (Amendment) Bill reflects the enormous significance of the SACCO sector within Kenya’s economy.

Kenya possesses one of the most developed cooperative movements in Africa, with SACCOs playing a critical role in financial inclusion, savings mobilization, affordable credit access, and grassroots economic empowerment.

Millions of Kenyans rely on SACCOs for personal loans, housing finance, education funding, agricultural investments, and business capital. The sector also supports employment creation and community development across urban and rural areas.

Unlike many commercial financial institutions, SACCOs are deeply embedded within communities and professional groups. Their member-driven structure allows them to respond more directly to local needs while promoting collective ownership and shared prosperity.

Because of this unique role, sector leaders argue that regulatory reforms must strike a careful balance between strengthening oversight and preserving the cooperative values that have enabled SACCOs to thrive.

Stakeholders fear that excessive convergence with banking regulations could unintentionally erode the flexibility, accessibility, and member-focused culture that distinguish SACCOs from other financial institutions.

Call for Realistic Implementation Timelines

Another concern highlighted by the cooperative movement involved the implementation timelines attached to the proposed reforms.

The CAK urged lawmakers to adopt practical and sustainable transition periods that would allow SACCOs adequate time to comply with new requirements without disrupting operations.

This issue was particularly important for smaller SACCOs that may lack the technical capacity or financial resources to immediately adapt to complex regulatory changes.

Stakeholders argued that rushed implementation could place unnecessary strain on societies already managing operational challenges in a competitive financial environment.

The Alliance therefore called for phased implementation strategies accompanied by capacity-building support to help SACCOs adjust effectively to any new legal requirements.

Leaders maintained that reforms should strengthen the sector progressively rather than imposing abrupt obligations that could weaken member confidence or financial stability.

A Sector Ready for Constructive Engagement

Despite the concerns raised during the parliamentary engagement, cooperative leaders reiterated their willingness to work collaboratively with government institutions and lawmakers in refining the bill.

The CAK and other stakeholders emphasized that they support efforts aimed at enhancing accountability, protecting members, and strengthening sector resilience. However, they insisted that reforms must remain anchored in cooperative principles and tailored specifically to the realities of SACCO operations.

The discussions at Parliament Buildings highlighted the maturity and organization of Kenya’s cooperative movement, which continues to actively participate in shaping policies that affect its future.

As the National Assembly’s Departmental Committee on Trade, Industry and Cooperatives prepares for further deliberations, attention will now focus on how lawmakers reconcile the positions advanced by the government, the Committee of Experts, and the cooperative sector itself.

Key unresolved issues include the structure and funding of the Stabilisation Protection Scheme, the definition of eligible entities under the legislation, the relationship between SACCOs and broader financial regulatory frameworks, and the timelines for implementation.

For the cooperative movement, the stakes remain high. Sector leaders believe the decisions made during this legislative process will shape the future of SACCOs for years to come.

Their message to Parliament has been clear: reforms are necessary, but they must protect the cooperative identity, preserve member ownership, and strengthen the unique savings-and-credit model that has made Kenya’s SACCO movement one of the most successful in the region.