Principal Secretary for Co‑operatives and Micro, Small and Medium Enterprises (MSMEs) Development, Patrick Kilemi, has called on Savings and Credit Cooperative Societies (Saccos) to strengthen their institutional capital and shift focus from competing through high dividend declarations to offering affordable loans that directly benefit members.
Speaking during an interview on a local station on Thursday, July 4, 2026, Kilemi said Saccos must embrace sustainable growth models that enhance financial stability and improve services to members. He noted that for years, some institutions have concentrated heavily on attracting members through high dividend payouts, a trend that has occasionally exposed them to financial strain.
“We are encouraging our Saccos to grow institutional capital as their core capital. We want them to compete based on loans given to members rather than dividends.”
PS Patrick Kilemi
Kilemi emphasized that the primary role of Saccos should be to provide affordable financial support to members, who often join cooperatives to access credit for personal projects, business ventures, and other financial needs.
Kilemi said that the government is pushing for a lower interest rate environment in line with broader economic objectives.
“Our goal is to give members loans at nine per cent under a single‑digit regime rather than having Saccos advertising dividends of 20 per cent and above,” he added.
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Kilemi also raised concern over borrowing practices within some institutions, saying there had been cases where funds were acquired for purposes that did not contribute to sustainable growth. He explained that requests for borrowing approvals had reduced significantly following increased scrutiny from regulators. “We ask them questions when they bring requests for money. Why are you taking this money?” he said.
He warned against borrowing funds simply to sustain dividend payments, arguing that such practices create artificial performance and could eventually harm institutions.
Instead, he maintained that strengthening institutional capital and reducing dependence on unsustainable borrowing would help Saccos remain stable and better serve their members.
Kilemi concluded that sustainable growth would allow Saccos to continue supporting members while reinforcing the wider cooperative sector.
By focusing on affordable loans and prudent financial management, he said, Saccos can safeguard their future and deliver greater value to millions of Kenyans who rely on them for credit and economic empowerment.
By Masaki Enock
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