- Cooperative Societies Bill nears final parliamentary hurdle after 14 years.
- Proposed law seeks stronger governance and protection of Sacco members.
- CAK calls for tax clarity and greater youth participation in cooperatives.
Kenya’s cooperative movement is bracing for a new legal framework, with sector leaders saying the long-awaited Cooperative Societies Bill is nearly through its final hurdle in Parliament.
Cooperative Alliance of Kenya (CAK) Chief Executive Officer Daniel Marube said the mediation process between the National Assembly and the Senate is almost complete. Once the mediation committee meets once or twice more, he said, cooperatives should finally get the legal framework the sector has been waiting on for years.
Lessons from the KUSCCO collapse
Marube pointed directly to the Kenya Union of Savings and Credit Co-operatives (KUSCCO) as a cautionary example, noting that the institution operated without proper regulation before its troubles came to light. That gap, he said, has shaped how the new law has been drafted, with lessons from the KUSCCO experience built into the proposed framework.
He urged lawmakers on the mediation committee to move quickly, even while acknowledging it remains within their right to take their time. Passing the bill promptly, he argued, would strengthen governance, accountability and transparency across the sector, and would also introduce mechanisms to punish anyone found responsible for misappropriating funds or misusing office for fraud.
The bill has reportedly been in development for close to 14 years, shaped through extensive consultation with cooperative stakeholders, and is expected to face further public participation once it moves to the Senate.
Among its proposed reforms is the creation of Sacco unions, which would allow institutions with shared interests to pool resources such as legal support, auditing and technology, along with a Sacco Deposit Guarantee Fund modelled on the Kenya Deposit Insurance Fund, intended to protect member deposits should a Sacco collapse.
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Marube’s remarks came during what he described as an intensive multi-day training programme aimed at equipping cooperative leaders with tools to strengthen governance across the movement. He said the sessions are designed to help “jump-start” cooperatives with stronger instruments and better oversight, positioning the movement for both current and future generations.
Technology featured prominently in his remarks. Marube said the sector has recognised that younger members are far more technology-oriented, prompting CAK to bring young people into the conversation directly, asking what kind of Saccos and services they expect, so the movement can plan its future with youth input built in from the start.
A tax system out of step with cooperative structures
Marube also raised concerns about how Saccos are taxed, describing a persistent lack of harmony between the sector and the Kenya Revenue Authority. He said CAK is using the training sessions to teach members proper bookkeeping and the importance of paying legitimate taxes on time, calling it an obligation for every Kenyan, individual and corporate alike.
He pointed to a specific problem facing Saccos that serve chamas, informal women’s savings groups. According to Marube, even a small number of chamas banking with a Sacco can alter how that Sacco is taxed, sometimes resulting in unexpectedly high tax estimates.
He said CAK is trying to establish where the disconnect lies, whether in how Saccos keep records, or in how the Cooperative Societies Act and Sacco Societies Act define membership and taxable activity, so that cooperatives and tax authorities can reach a shared understanding.
Marube linked the issue to the government’s financial inclusion agenda, describing cooperatives as the vehicle through which ordinary Kenyans, including those in informal savings groups, can be brought into the formal financial system. Resolving the tax ambiguity, he suggested, would be key to making that inclusion work without penalising the Saccos carrying it out.
By Benedict Aoya
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