The government has warned that thousands of savings and credit cooperatives and threatened to revoke the licenses of more than 10,000 Saccos that have failed to meet statutory obligations, including the filing of annual returns for years.
Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya said the scale of non-compliance has raised serious concerns about transparency, accountability and the safety of members’ deposits.
Out of approximately 13,000 registered Saccos in the country, only about 2,700 regularly file returns with the Office of the Commissioner for Cooperatives as required by law.
“This has put to test the spirit of transparency and accountability and is now risking members’ deposits. Regulations demand that all registered Saccos file returns to the Commissioner for Cooperatives,” said Mr Oparanya, adding that repeated reminders from regulators have largely gone unheeded.
He warned that the government will move decisively within the next 21 days, with the Commissioner for Cooperatives expected to gazette a notice compelling compliance. Failure to file returns within that window will trigger deregistration. “We have to ensure regulations are followed to the letter with a view to guarantee prudent financial management,” he said.
The failure by thousands of Saccos to submit returns has also left the government in the dark about their operations, financial health and even physical locations. According to Mr Oparanya, filing returns is the primary mechanism through which authorities monitor the performance and governance of these institutions.
The cooperative sector in Kenya is vast and diverse, with different layers of oversight. While all Saccos are registered by the Commissioner for Cooperatives, only a small fraction fall under the stricter supervision of the Sacco Societies Regulatory Authority. About 350 deposit-taking and non-withdrawable deposit-taking Saccos that operate front office service activities are regulated by the authority and are required to file monthly returns under prudential guidelines introduced in 2008.
The majority, however, operate back-office service activities, meaning they mobilise member savings primarily as collateral for loans rather than offering withdrawal-based services. These non-deposit taking Saccos are regulated by the Commissioner for Cooperatives and are only required to file annual returns, a requirement many have consistently ignored.
A committee of experts appointed last year to review the Sacco Societies Act warned that more than 5,000 Saccos could be effectively unregulated, posing a growing systemic risk to the financial sector.
The rapid expansion of the cooperative movement, once seen as a pillar of financial inclusion, is now exposing gaps in oversight and governance.
Daniel Marube, chief executive of the Cooperative Alliance of Kenya, underscored the importance of compliance, noting that transparency and accountability are fundamental to the sector’s stability.
“Every registered Sacco is required under law to file returns every year. Defaulting for three consecutive years risks deregistration. Boards and management must ensure these fundamentals are upheld,” he said.
He also urged smaller Saccos lacking internal audit capacity to seek support within the cooperative movement, warning that failure to do so could erode public trust in a sector that remains critical to Kenya’s grassroots economy.
