- Government rules out term limits for Sacco directors, saying leadership should remain a democratic choice for members.
- Ministry plans to expand SASRA oversight to regulate all Saccos, strengthen governance and deploy technology for closer financial monitoring.
- Proposed Sacco Societies (Amendment) Bill, 2025 creates an independent Deposit Guarantee Fund Board to protect members’ deposits and improve accountability.
The government will not impose term limits on Sacco directors, Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Wycliffe Oparanya has said, opting instead to strengthen regulatory oversight of the sector.
Speaking in an interview, Oparanya said the ministry reviewed international best practices on tenure limits but concluded that capping terms would undermine the democratic independence of savings and credit co-operative organisations (Saccos).
“We have realised that some Saccos have had chairpersons who have remained in office for decades. We considered introducing term limits for directors after comparing practices in other countries. However, these Saccos are private entities formed by members and are governed by democratic principles. As long as members continue electing them, they remain in office,” Oparanya said.
Instead of capping tenure, the CS said the government will expand the mandate of the Sacco Societies Regulatory Authority (SASRA) to strengthen oversight, accountability and governance across the cooperative movement.
The ministry plans to broaden SASRA’s role in supervision, licensing and monitoring of Saccos. This includes deploying technology to track their financial operations more closely.
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Under the proposed reforms, all Saccos will fall under regulatory oversight. This replaces the current framework, where comprehensive supervision mainly targets deposit-taking Saccos.
“A shilling in a small Sacco is equal to a shilling in a bigger Sacco. Supervision is going to be critical to improve management while allowing Saccos to make their own decisions based on their bylaws,” Oparanya said.
The reforms form part of wider efforts to strengthen governance and restore public confidence in the cooperative movement, following a financial crisis in the management of some Saccos.
New governance structure for Deposit Guarantee Fund
The proposed Sacco Societies (Amendment) Bill, 2025 seeks to establish a new governance structure for the Deposit Guarantee Fund. This would create an independent Board of Trustees tasked with safeguarding members’ deposits.
Under the Bill, the Board will be chaired by a non-executive chairperson appointed by the President. The chairperson must have at least 15 years of professional experience in banking, financial regulation, insurance, commerce, law, accountancy or economics.
The Board will also include representatives from the National Treasury and the State Department for Co-operatives, four independent members appointed by the Cabinet Secretary, and the SASRA Chief Executive Officer, who will serve as an ex officio member and secretary.
To strengthen the Fund’s independence, the Bill bars serving Sacco officials, directors, associates and recent auditors from sitting on its Board. All appointees must also meet Chapter Six requirements of the constitution.
The Board will manage the Fund, collect contributions from Saccos, inspect institutions and process compensation claims when licences are revoked. It may deny compensation to individuals linked to a Sacco’s insolvency.
The proposed law also shields Board members and staff from personal liability for actions taken in good faith, though the Fund itself remains liable for damages arising from its operations.
By Bernard Magada
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