Kenya has ended its year-long suspension on registering savings and credit cooperatives (SACCOs), but has introduced stricter conditions aimed at strengthening oversight and restoring trust in a sector long troubled by governance weaknesses.
Under the new framework, any aspiring SACCO must now prove it has at least KSh 1.2 million in operating capital before being licensed. Applicants will also need to show they have proper physical offices, staff in place, and a structured management system.
In addition, new entrants are required to demonstrate the capacity to raise at least KSh 10 million within their first year of operation. Authorities say this is intended to discourage underfunded entities that depend heavily on members’ deposits just to meet basic running costs.
The reopening follows a suspension introduced in May last year after repeated operational failures and governance scandals in several major cooperatives exposed gaps in regulation. According to the Commissioner for Co-operative Development, David Obonyo, the focus is now on building financially stable institutions with proper infrastructure, not loosely structured outfits operating on shaky foundations.
During the freeze, state agencies reviewed the legal and regulatory framework governing SACCOs, resulting in tighter entry thresholds designed to weed out weak or unsustainable players. Regulators are dealing with a sector that is extensive but inconsistently compliant, with around 14,000 registered SACCOs, yet only about 4,000 regularly filing annual returns.
Alongside the licensing overhaul, governance reforms are also being introduced. SACCOs with more than 5,000 members will now be required to adopt a delegate system for annual general meetings, replacing large, often chaotic mass gatherings with a more structured decision-making model.
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Broader legislative reforms are still under negotiation, with a revised Co-operative Bill awaiting resolution between the National Assembly and the Senate, particularly on issues such as term limits for officials. Authorities are hoping to conclude the process ahead of International Co-operative Day in July.
SACCOs remain a major pillar of Kenya’s financial system, serving millions and channelling savings into credit for small enterprises, housing, and agriculture. However, their scale has also made them vulnerable to mismanagement, political interference, and weak internal controls.
Although SACCO deposits climbed to KSh 749.4 billion across 16 million accounts in 2024, the distribution is heavily skewed, with about KSh 566 billion held by a small fraction of accounts, underscoring inequality within the system.
Regulators are now banking on stricter entry rules and governance reforms to consolidate the sector, likely pushing smaller or fragile SACCOs towards mergers or closure in favour of fewer but more financially stable institutions.
