CAK Pushes Changes to Sacco Amendment Bill Over Regulatory Concerns

The Co-operative Alliance of Kenya has proposed major changes to the Sacco Societies (Amendment) Bill, arguing that several provisions in the proposed law could undermine the identity of savings and credit cooperative societies (SACCOs) and impose unnecessary financial burdens on members.

The alliance submitted a memorandum to the National Assembly’s Departmental Committee on Trade, Industry and Cooperatives, calling for refinements to the bill to improve regulatory clarity and protect the cooperative sector.

The proposals were tabled during a committee sitting chaired by member of Parliament for Ikolomani Constituency Bernard Masaka, bringing together cooperative sector leaders, principal secretaries and technical experts to discuss the direction of the proposed legislation.

Among the key recommendations, CAK urged lawmakers to remove the term “Credit Union” from the bill, saying it fails to capture the savings component that distinguishes Kenyan SACCOs from credit-only cooperative systems used in other jurisdictions.

The alliance argued that Kenya’s SACCO framework is built on a dual savings-and-credit model, which should remain clearly reflected in law.

On the proposed Stabilisation Protection Scheme, CAK recommended that the mechanism be managed directly by the Sacco Societies Regulatory Authority and funded through multiple sources, including industry penalties and private capital, to reduce pressure on member societies.

The alliance also opposed plans to align a proposed Deposit Guarantee Fund with the Kenya Deposit Insurance Corporation, warning that the corporation was designed specifically for banking institutions and not cooperatives.

According to CAK, merging the two systems could compromise SACCO principles such as member ownership and institutional autonomy.

Masaka welcomed the cooperative sector’s input, saying stakeholder engagement was essential in crafting a strong and sustainable legal framework.

“We are happy to engage you. If you feel you have some information that would help the community develop this bill better, please do not hesitate to bring it to us,” he said.

The committee chair also signalled readiness to recall the Committee of Experts to respond to technical concerns and ensure the bill aligns with operational realities within the SACCO sector.

MP Marianne Kitany, the committee’s vice chairperson, called for alignment between the government’s legislative proposals and recommendations already made by sector experts.

“My view is that the PS should step down his presentation so that we can engage again on this issue of the report of the Committee of Experts and what he’s presenting and alignment with the cooperative alliance,” Kitany said.

Her remarks reflected concerns that conflicting or overlapping regulatory proposals could create uncertainty and delay implementation.

Sector leaders also raised concerns over attempts to regulate SACCOs under frameworks similar to those used for commercial banks and microfinance institutions.

Solomon Atsiaya argued that SACCOs had demonstrated strong performance under the current model and warned against importing regulatory systems that may limit growth.

“Our circles are actually performing better. The regulatory framework there has constrained them on how they do their business. This model has worked — why can’t we protect this model that has worked and then empower our regulator, SASRA, to regulate our circles very well?” he said.

Atsiaya urged Parliament to consider recalling the bill to incorporate recommendations from expert reports before advancing it to the next stage.

The committee is expected to hold further sittings to harmonise positions from the government, CAK and the Committee of Experts before the bill proceeds in the House.

Outstanding issues include the financing structure of the proposed Stabilisation Protection Scheme, definitions of entities covered under the law and timelines for compliance with new regulations.

CAK has also called for realistic implementation timelines to avoid weakening smaller community-based SACCOs that may struggle to absorb abrupt regulatory changes.