Cabinet Secretary for Cooperatives and SMEs, Wycliffe Oparanya, has announced the introduction of a Deposit Guarantee Fund aimed at protecting members’ savings in SACCOs in the event of a SACCO collapse.
Oparanya assured members that their deposits would be safeguarded, ensuring that they can recover their money even if their SACCOs fail.
Speaking about the new initiative, Oparanya highlighted the government’s commitment to strengthening the SACCO sector and providing financial security to its members.
“We are protecting SACCO members’ deposits. This fund will ensure that, in the event of a SACCO collapse, members will be able to recover their funds,” he said.
The initiative is part of the ongoing discussions surrounding the Sacco Societies (Amendment) Bill, 2025, which is currently at the Public Participation stage.
The National Assembly has called for stakeholders and the general public to submit written memoranda on the bill, with a submission deadline set for April 24, 2026.
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Oparanya explained that the proposed Deposit Guarantee Fund would be incubated within the existing Kenya Deposit Insurance Corporation (KDIC) framework. KDIC, which currently manages deposit insurance for banks, has the required infrastructure, regulatory expertise, and experience to effectively administer the SACCO insurance scheme.
He said by incorporating the SACCO Deposit Guarantee Fund within the KDIC framework,they are leveraging an existing institution with proven capability. They will manage the fund until DGF mature.
Currently, bank deposits in Kenya are insured up to KSh 500,000 per account. This has given banks a competitive edge over SACCOs in terms of depositor protection. To level the playing field, the SACCO sector is advocating for SACCOs to also be insured for up to KSh 500,000, aligning with the protections offered to bank depositors.
In addition, the proposed changes will include the establishment of a self-sustaining institution that will provide loans to SACCOs in distress to help stabilize them. SACCOs will contribute to this institution, ensuring it remains financially viable.
By Obegi Malack
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