- Saccos await legal reforms that could unlock shared liquidity and cheque clearing access.
- Delays in the Cooperatives Bill are slowing efforts to strengthen governance and competition.
- Industry leaders say a unified payments and lending platform could boost deposits, loans and membership.
Saccos offering Front Office Service Activity (FOSA) are losing ground to rival lenders. Parliament is dragging its feet on amendments that would unlock a shared liquidity platform.
The Sacco Act No. 14 of 2008 sets out the core legal framework governing all licensed Deposit-Taking and Non-Withdrawable Deposit-Taking Saccos in Kenya. Pending amendments to the Act would create a liquidity platform allowing Saccos to lend to one another.
The platform would also let Saccos tap overnight or short-term loans and join the national cheque clearing house. Progress has been slow.
Lawmakers have yet to finalise the changes. This leaves Saccos without the inter-lending tools their competitors already enjoy.
A parallel reform effort has stalled too. Plans to publish a sessional paper for the co-ops sector and pass a new Cooperatives Bill remain unrealised.
READ ALSO:
The holdup is largely because the Senate and the National Assembly disagree over provisions in the draft Cooperatives Bill, 2024.
Industry still hopeful despite the delays
Even so, sector leaders remain confident that a new Cooperatives Act and updated Sacco Act amendments are within reach.
Mentor Sacco chief executive officer Joyce Waceke Ndegwa said the sector currently enjoys strong goodwill. She added that progress now depends on wider public participation and closer coordination among stakeholders.
She pointed to a flood of disjointed forums spreading information that has not been properly researched. She argued this misinformation is doing more harm than the legislative delays themselves.
Many in the industry trace the slow pace of reform to competing interest groups. They are jostling for influence over a co-operative sector worth an estimated Ksh 1.5 trillion.
What joining the clearing house would mean
Kenya National Police Sacco national chairman David Mategwa said integration into the National Payments System would help Saccos expand deposits and grow their loan books. He added that it would also help attract new members.
He noted there is still considerable room to bring more Kenyans into the Sacco fold. The proposal, though years in the making, has gained real momentum recently, he said, and is now close to being operationalised.
READ:
Diaspora members would also benefit. He said they would gain the ability to wire money straight into their Sacco accounts rather than routing through banks.
Credit unions in other countries already operate liquidity facilities that let members lend to and borrow from one another. This cuts the cost of funds available for onward lending.
Kenyan Saccos have long lacked an equivalent mechanism.
New Act to tackle governance gaps
Ndegwa said the incoming Cooperatives Act is designed to close legal and regulatory gaps in the sector. This includes weak governance structures at secondary co-operative societies.
She pointed to the collapse at the Kenya Union of Savings and Credit Co-operatives (KUSCCO) as an example of this governance problem.
She noted that established platforms already exist for Sacco chief executives, boards and members. These allow engagement in policy discussions and public participation whenever regulatory changes are proposed.
By Benedict Aoya
Get more stories from our website: Sacco Review.
For comments and clarifications, write to: Saccoreview@
Kindly follow us via our social media pages on Facebook: Sacco Review Newspaper for timely updates
Stay ahead of the pack! Grab the latest Sacco Review newspaper!
