- Saccos face another wait for direct access to Kenya’s National Payments System
- Industry leaders call for wider consultation as the Co operatives Bill remains stuck in mediation
- Proposed reforms could introduce a Deposit Guarantee Fund and expand services available to Sacco members
Kenya’s Sacco movement is facing another delay in its push for direct access to the National Payments System, with a proposed law now stuck in the parliamentary process.
The Co-operatives Bill, 2024, is intended to replace the decades-old Co-operatives Act, Cap 490, and introduce changes to the legal and regulatory framework governing the sector.
However, progress on the legislation has stalled after the National Assembly rejected amendments made by the Senate, sending the Bill to a Mediation Committee.
Consequently, the development has left financial cooperatives waiting for Parliament to resolve differences between the two Houses before the legislation can proceed to the President for assent.
The National Assembly initially passed the Bill with amendments on December 3, 2024. It was subsequently considered by the Senate, which passed it with further amendments and returned it to the lower House for consideration. The National Assembly rejected the Senate’s proposals on April 14, 2026, prompting the referral of the Bill to mediation.
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The delay has raised concerns among industry players, who say some of the proposed reforms are necessary to modernise the cooperative sector and close regulatory gaps exposed by recent challenges.
Joyce Waceke, chief executive of Mentor Sacco, said there was broad support within the industry for reforms but warned that the process required greater consultation.
“There is a lot of goodwill from the co-operatives sector about the need for legal and regulatory reforms. At present, we have numerous forums that are disseminating information, most of which are not well-researched, doing the rounds,” said Waceke.
She said the size of the cooperative sector made it particularly attractive to groups with competing interests. “This industry is huge, with a lot of resources, and therefore attracting the attention of vested interests and groups.” Waceke added that stakeholders needed to participate more actively in discussions surrounding the proposed law to build consensus on the reforms.
Saccos still lack inter-Sacco lending facility
Meanwhile, the legislative impasse comes as Saccos continue to operate without an inter-Sacco lending facility following the financial difficulties that affected the Kenya Union of Savings and Credit Cooperatives (KUSCCO).
The absence of such a facility has left Saccos with fewer options for accessing affordable liquidity within the sector.
Kenya Association of Front Office Service Activity Coast region chairman Isedorius Agolla said an organised inter-Sacco lending arrangement could reduce the cost of borrowing for financial cooperatives.
“Inter-Sacco lending is a long overdue issue. But once structures are put in place and a central pool identified, Saccos will be able to access the facility that offers loans at lower rates than what banks are offering and hence make more profits,” said Agolla.
Deposit Guarantee Fund among proposed reforms
Among the proposed changes in the Bill is the creation of a Deposit Guarantee Fund, which would provide compensation to members if a financially distressed Sacco is liquidated.
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Waceke said such provisions could help address weaknesses in the existing regulatory framework, particularly in the wake of the KUSCCO crisis.
“The new Cooperatives Bill that is coming up seeks to address some of the legal challenges and regulatory gaps that allowed losses to occur, as in the case of KUSCCO, which took place over a long period of time without anyone noticing or taking any action. We need a regulatory framework to govern the operations of secondary cooperative societies such as KUSCCO,” she said.
She added that the proposed legislation would also give Saccos greater room to expand the services they offer their members.
“The new bill will repeal the current Cooperatives Act Cap 490, enabling Saccos to enter the National Payments System, for instance. This has enormous benefits for Saccos in terms of service delivery to members, such as clearing of cheques without going through a bank,” she said.
The proposed changes are being pursued against the backdrop of a sizeable cooperative sector, with industry data showing that cooperatives, including Saccos, housing, coffee and dairy societies, hold more than Ksh1.5 trillion in deposits and assets.
Ultimately, the outcome of the mediation process will determine whether long-awaited changes to the legal framework can move forward and open the way for Saccos to expand their role in Kenya’s financial system.
By Jonathan Mwinzi
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