The government has announced a sweeping crackdown on Sacco boards accused of misusing members’ deposits through lavish foreign trips, manipulation of financial statements, and unsustainable borrowing practices.
Cooperatives Principal Secretary Patrick Kilemi, speaking during the Harambee Sacco Annual Delegates Meeting (ADM) in Nairobi, revealed that legislative and policy reforms are already before the ministry and Parliament to strengthen oversight of Sacco leadership. He said the reforms are aimed at curbing excesses that have eroded trust in the cooperative movement.
Kilemi singled out boards that have allegedly turned member savings into personal benefits, particularly through excessive international travel. “We want trips made by Sacco boards audited to assess their true importance. There are societies taking advantage of members’ deposits to enrich themselves,” he said.
He noted that some Saccos have entered questionable arrangements with tour and travel companies, resulting in frequent benchmarking trips abroad that offer little value to members. Instead, the ministry is advocating for local peer‑to‑peer learning, urging Sacco leaders to benchmark within Kenya by studying successful institutions such as Harambee Sacco.
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Speaking during the event, the commissioner for Cooperatives, David Obonyo also warned against the practice of inflating financial results to declare attractive but unsustainable dividends. He described the manipulation of accounts as a “recipe for disaster” that could destabilise the sector if left unchecked.
To address this, the government has directed top‑tier Saccos to engage reputable auditing firms with international operations to enhance transparency and accountability in financial reporting. The crackdown will also target “over‑borrowing,” with some Saccos reportedly taking on excessive debt to meet unrealistic member demands.
Kilemi further revealed that the ministry is seeking to influence how Saccos price their credit products. He announced plans to launch an awards programme in October to recognise institutions that prioritise member welfare by offering loans at single‑digit or otherwise affordable interest rates.
The move is intended to encourage prudent financial management and reduce the debt burden on Kenyan households, steering Saccos away from aggressive, commercial‑style lending practices that have raised concerns in recent years.
By Masaki Enock
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