Cooperatives sector players and stakeholders in Kenya is still holding its breath into the new year, while glancing at what they missed or achieved in 2025 and what remains as unfinished business. This publication takes a bird’s eye view of achievements by Kenya’s vibrant Cooperatives Sector in 2025, missed opportunities and chances as well as 2026 prospects for Kenya’s vibrant cooperative sector.
While financial cooperatives are still locked out of the National Payments System and lack an inter-lending facility, they have been able to ride on technology and other delivery channels to survive in a fiercely competitive financial sector.
Cooperatives locked in the fierce technology race
Digital transformation enabled financial cooperatives to make profits in 2025, implying that this route is definitely the one to take for these financial organizations. In 2025, SACCOs were also able to register more members that the previous year, owing to the use of technology, to recruit new members.
Financial Cooperatives or Savings and Credit Cooperative Societies(SACCOs) now offer mobile money and digital credit platforms, providing members access to ATM, credit and debit cards, Pesalink as well as cheque issuance, clearance and settlement services.
These financial cooperatives are also progressively riding on agency banking platforms, which are cheaper to set up and maintain, to offer services such as cash deposits and withdrawals to members.
SASRA expects the trend of deployment of SACCO agents as an alternative to the other modes of financial service delivery based on its lower capital cost outlay and maintenance.
“There is need for continuous investment in technology in 2026 so that SACCOs can streamline their operations and integrate so as to improve member services and enhance data management. While on this path, SACCOs need to put in place more robust cyber security measures that will protect member data and build more trust in digital services, “said Solomon Atsiaya, Chief Executive Officer, Kenya National Police SACCO.
In a fiercely competitive financial sector and a rapidly evolving business landscape, Atsiaya said, “As cooperative societies and SACCOs usher in the new year, they need to regularly review and adapt strategies that will ensure they remain on course and achieve their mission”.
The year 2024-25 saw financial instability rock the giant Kenya Union of Savings and Credit Cooperative Society(KUSCCO), sending shockwaves through the entire sector.
Problems at KUSCCO came to light in early 2025 when the State ordered for a probe into activities, accusing the directors at KUSCCO of running several illegal business operations and offering products without the requisite licensing and approvals from the Sacco Societies Regulatory Authority(SASRA). While those found culpable were forced to resign, none has been prosecuted.
A cross section of SACCO executives interviewed by this publication hold the view of the need to reform operations at KUSCCO and rescue all those SACCOs who have lost huge deposits and savings held in custody by the Union.
“There is need to align the cooperative structure so that KUSCCO can revitalize and convert into a financial cooperative federation that will enable the Union to play its role of advocacy and policy influence while championing the Financial Cooperative Agenda for favourable policies, industry collaboration and networking to share best practices, “said Atsiaya.
The KUSCCO Central Finance Facility(CFF) hit headwinds between October 2023 and January this year when it experienced significant challenges precipitated by panic withdrawals, nearly grounding its ability to operate, lend or reimburse deposits to members.
As 2025 came to a close and with no inter-Sacco lending facility in place following troubles at KUSCCO, financial cooperatives are still locked out of the National Payments System and thus cannot engage in overnight lending activities or inter-Sacco borrowings.
“Inter-Sacco lending is a long pending issue. But once structures are put in place and a central pool identified, Saccos will be able to access a facility that offers loans at lower rates than that offered by banks and hence make more profits,” said Agolla.
The Sacco sector, despite holding huge deposits belong to members, also closed 2025 without the much anticipated deposit guarantee fund in place. Thus, SACCOs members are exposed with no protection in the event that a financially troubled Sacco goes under and is liquidated.
Members of the cooperative society and the Sacco subsector fraternity are also still holding their breath as 2026 begins with the process of repealing the outdated Coop Act Cap 490, still in limbo.
While a sessional paper has been drawn that will trigger a repeal of the old law and the proposed new Cooperatives Bill 2024 already published, the document is still stuck in parliament that is yet to be debated and approved.
“While the Cooperatives Bill 2024 will recognize County Directors as stipulated, it is still unclear whether they will revert to be employees of National or County Governments, “said Agolla.
The Co-operative Societies Bill 2024 aims to amend the Co-operative Societies Act, No. 12 of 1997 in order to align it with the Constitution of Kenya, 2010 by setting out the functions of the National Government and the county governments in relation to governance of co-operative societies.
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