SACCOs (Savings and Credit Cooperative Societies) will soon have a new face if proposed amendments to the Sacco Societies Act, are passed into law by parliament.
The Bill includes provisions for creation of a Deposit Guarantee Fund similar to commercial bank protections — a system that can compensate members if a SACCO collapses. This is intended to give members some security for their savings.
There is also a push to set up a Central Liquidity Facility (CLF) or shared liquidity management structure. This hasn’t yet become law, but is part of the transformation roadmap being reviewed with government and experts. Instead of SACCOs dealing independently with liquidity shortfalls or reliance on banks, the industry would pool resources and manage liquidity centrally.
The reforms under review envisage a shared services framework and stronger oversight mechanisms — including tighter compliance, approvals, and reporting structures. This is part of a broad exercise to modernise the SACCOs sector following past governance issues.
SACCOs have faced serious governance and financial irregularities in recent years. Fraud at some umbrella bodies (e.g., KUSCCO) and losses running into billions have prompted government action to restore confidence and tighten controls.
Regulators like the Sacco Societies Regulatory Authority (SASRA) have been pushing for stronger compliance, audited financial reporting, and better risk management to protect members and improve reliability.
With the new amendments, SACCOs will face stricter monitoring, reporting demands, and possibly new approval requirements for key decisions. This is aimed at reducing mismanagement but can also limit operational flexibility compared to the past.
SACCOs to have a deposit guarantee fund
The proposed Deposit Guarantee Fund for SACCOs is meant to protect members in the event of collapse, but it may not fully cover all savings — especially large balances above the coverage limit (which has been a topic of public discussion).
If liquidity is managed at an industry/central level, SACCO member access to funds could be subject to rules and timing set by the system rather than instant flexibility — particularly in stress periods. This structural change can mean slower withdrawals if protocols or approvals are required.
In situations of a SACCO failure or disputes, member claims may have to go through formal legal procedures before payout — adding time and complexity. This is inherent in legal protections and reforms being considered.
The government and sector stakeholders are trying to overhaul and stabilise the entire SACCO system because growth in transactions and digital adoption has exposed liquidity and operational gaps. Major scandals such as those involving KUSCCO Metropolitan National SACCO have damaged confidence and highlighted weak governance..
Policymakers want a sector that protects members and plugs systemic risks — even if that means more centralised control and oversight.
Reform is not just a routine update — it is a response to deep structural and governance weaknesses. Reforms aim to protect depositors, but they also bring greater control and central oversight over how SACCO funds are handled and accessed.
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