MPs call for stronger protection for SACCOs savings as Amendment Bill comes under scrutiny

Members of the National Assembly Departmental Committee on Trade, Industry and Cooperatives have called for the inclusion of stronger safeguards in the proposed Savings and Credit Cooperative Societies (SACCOs) legislation, saying the law should better protect members’ savings while promoting accountability and efficiency without imposing excessive bureaucratic requirements.

The committee, chaired by Bernard Shinali, met officials from the SACCO Societies Regulatory Authority (SASRA) to consider the proposed Sacco Societies (Amendment) Bill, 2025.

The Bill seeks to strengthen the regulation of SACCOs, improve prudential oversight and enhance the security of members’ deposits.

During the session, legislators cautioned against introducing excessive administrative requirements that could burden SACCO operations.

They noted that SACCOs remain the preferred source of affordable credit for many Kenyans because of their accessible lending procedures and ability to provide quick financial assistance during emergencies.

The MPs also raised concerns over the proposed deposit insurance framework, which would compensate members up to Ksh100,000 per depositor should a SACCO collapse.

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They argued that the proposed compensation limit is inadequate for members with larger savings and urged SASRA to develop a more equitable model that offers greater protection to depositors.

Additionally, lawmakers challenged the regulator to ensure the proposed legislation is future-oriented and responsive to the evolving needs of the cooperative sector.

They recommended that operational matters be addressed through administrative regulations where possible instead of embedding every reform in law, allowing greater flexibility as the sector continues to grow.

The proposed Bill aims to strengthen the safety of members’ savings through enhanced prudential supervision and oversight while improving the long-term sustainability of SACCOs, particularly smaller institutions.

It also seeks to promote shared digital and technological platforms that would enable smaller SACCOs to reduce operational costs, improve efficiency and benefit from economies of scale.

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Appearing before the committee, SASRA Chief Executive Officer (CEO), David Sandagi said the Bill would boost public confidence in SACCOs by establishing a deposit insurance fund to safeguard members’ savings in the event of the collapse of a regulated SACCO.

Sandagi further explained that although SASRA has made significant investments in technology to improve regulatory oversight, many smaller SACCOs have struggled to adopt similar systems due to financial and technical limitations.

He said the proposed amendments would enable these institutions to access shared regulatory technology platforms, making supervision more effective while reducing compliance costs.

By Juma Ndigo