SACCO (Savings and Credit Cooperative Societies) members are likely to turn noisy, stormy and acrimonious during the upcoming stormy 2026 Annual Delegates Meetings(ADMs). This is those who receive cheques with less dividends or rebates amounts, take their directors to task.
SACCO Directors, who had organised to hold their ADMs in early January and February, ahead of the March 15th Deadline for submitting audited accounts to the regulator, have already cancelled such plans.
Financial Cooperative Societies that have not performed in 2025 have been prohibited from borrowing from banks to pay dividends or rebates.
Further, Directors of such financially underperforming SACCOs, have been prevented from awarding themselves any bonuses, honoraria or receive salary increments, sitting allowances and other benefits.
Financial Cooperatives form the largest plunk of the cooperatives sector. By the end of September 2025, the SACCO sector’s balance sheet size stood at KSh 1.2 trillion, highlighting the sector’s expanding role in financial inclusion and enterprise financing, in Kenya.
It is for the enormous size and resources and what happened with financially-stressed Kenya Union of Savings and Credit Cooperatives(KUSCCO) unlicensed financial instruments that the Sacco regulatory( SASRA) has raised the bar and its surveillance antenna.
Already, a SACCO such as Mentor and Newforties, which are usually the first ones to hold their ADMs, have been forced to withdraw their calendars following SASRA Directives. Most Societies that had scheduled their ADMs in February, have also folded these plans.
Undercapitalized Deposit-Taking SACCOs, which routinely capitalize some of their profits in order to meet set statutory requirements, have also be prohibited from taking such action by the regulator.
These far reaching sanctions and enhanced supervisory powers given to SASRA are contained in the SACCO(Amendment) Act 2018. Although this laws were passed during former President Uhuru Kenyatta’s tenure, SASRA has not been enforcing them.
SACCO laws prohibit weak SACCOs from declaring Dividends
Section 51 of the SACCO Act 2018 states in part that where the Authority determines that a Sacco conducts its business in a manner contrary to the provisions of this Act or any other regulations or conducts its business in any manner that is detrimental to or not in the best interests of its members or members of the public, or a society is under-capitalized, the Authority shall restrict, suspend or prohibit payment of dividends by the society.
Other sanctions that SASRA could deploy include prohibit the conversation of any profits of the Society into capital, removal of any officer implicated in such conduct or require the Society to reconstitute its board of directors.
The Authority is also empowered to prohibit the affected SACCO from awarding any bonuses, increments in salary, emoluments and other benefits to all directors and officers of the Society.
This law gives the regulatory body powers to prohibit any non-compliant Deposit-Taking financial societies from declaring dividends to members.
Directors of financially weak DT financial societies, with little or no surpluses, have in the past resorted to borrowing expensively from banks, so as to pay dividends.
The law gives SASRA powers to dismiss from office, those directors, committee members or staff who have benefited from unreported insider loan facilities, unauthorized sitting or travel allowance claims or unreasonable honoraria payments.
SASRA can also investigate lending policies of any SACCO, including its governance structures and whether the SACCO meets the required financial ratios.
“The law requires that any insider loans are reported to the Authority within 14 days. If the regulator’s inspections or surveillance unearth unreported insider loans to a director or management staff, it has the legal muscle to kick them out of office and have them surcharged. Another offence would be if these insider loans were given at more favourable terms compared to those conditions that ordinary members are required to meet,” said a SACCO Chief Executive who requested anonymity.
While the issue of honoraria payments made to directors is a matter previously subject only to approval by members at their Annual Delegates Meetings, SASRA has room to determine whether these benefits can be paid or not.
Interestingly, while the Commissioner for Cooperatives Development has ruled that only those Cooperatives that have made a profit can pay honoraria to directors, there was little the regulator can do to override a resolution from members at the ADM.
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