Govt to Track & Regulate SACCO Investments After KUSCCO Scandal

National Assembly's Leader of Majority leader Kimani Ichung'wah has proposed a law that will regulate groups SACCOs form such as the Kenya Union of Savings and Credit Cooperatives (KUSCCO).

As detailed in the Sacco Societies (Amendment) Bill, 2025, SACCOs will be allowed to form secondary SACCOS, which will be regulated and licensed by the Sacco Societies Regulatory Authority (SASRA). However, the minimum membership will have to be 30.

In the proposal, the secondary SACCOS will be allowed to take deposits from its members and invest in government securities.

The groups will also be allowed to offer short-term lending to members of SACCO societies and facilitate lending between the members.

"A secondary co-operative society undertaking central liquidity and shared services business may hold and maintain a liquidity reserve account for each member Sacco society," read the bill in part.

"They may also receive a prescribed minimum liquidity amount from member SACCO societies."

However, the secondary SACCOs will be banned from taking deposits from a single person, lending to an individual, and undertaking wholesale or retail business.

The KUSCCO-like organisations will also be banned from investing in venture capital.

Insured Deposits

Notably, under the proposed law, deposits in SACCOS will be insured, similar to bank deposits currently protected by the Kenya Deposit Insurance Corporation (KDIC). This means SACCO members could be refunded in case of institutional collapse.

“A member of a Sacco society may, upon the Sacco society’s licence or authorisation being revoked, lodge a claim with the Deposit Guarantee Fund, in such form and within such time as the Deposit Guarantee Fund may determine,” read the bill in part.

The move comes after the Ksh13 billion scandal, where several SACCOs lost members' deposits.

Officials of KUSCCO are accused of cooking books, forging a dead auditor's signature, and taking out loans (amounting to millions) and failing to pay them.