Clean Up Saccos, Protect Trillions Now

Clean Up Saccos, Protect Trillions Now”

Kenya’s sacco movement is too important to fail. Saccos and cooperatives support the livelihoods of an estimated majority of Kenyans, mobilise over KSh1.2 trillion in deposits, and channel credit into homes, farms, schools and small businesses that commercial banks often overlook. Yet, in a stark warning shot, about 25,000 societies now face deregistration for something as basic—and as revealing—as failing to file audited accounts and hold proper AGMs. 

A compliance crisis in a vital sector

The State Department for Cooperatives reports that fewer than 5,000 saccos submitted audited financial statements by June 2025, even as sector deposits climbed past KSh1.2 trillion. This means roughly five out of six registered societies are in breach of the law, concealing their true financial position from members and regulators alike. 

This is not a technicality. When audits are skipped and AGMs become a formality or disappear altogether, members are left blind while officials make decisions about billions of shillings of other people’s savings. The same governance weaknesses that enabled high-profile scandals at institutions like Kuscco, Ekeza and Metropolitan are present in miniature across thousands of small, poorly supervised societies. 

Cleaning up without killing the cooperative model

The temptation in the face of such widespread non-compliance is to write off the cooperative model as broken beyond repair. That would be a profound mistake. Saccos remain one of Kenya’s most effective tools for pooling capital at the grassroots, especially in agriculture and the informal economy, where traditional finance has limited reach. The challenge is not the idea of saccos, but the gap between the best and the worst. 

There are saccos that file timely audited accounts, run credible delegate-based AGMs, maintain strong capital buffers and lend prudently—in some cases contributing meaningfully to financial-sector assets and local GDP. Any clean-up must therefore be surgical: ruthless with rogue and dormant entities, but protective of institutions that have earned member trust through discipline and transparency. 

What regulators and government must do

• First, follow through on the threat of deregistration for societies that have ignored repeated notices to file audits and hold lawful AGMs, especially those in three-year default as allowed by the Cooperative Societies Act. Allowing “zombie” saccos to linger only erodes confidence in the entire movement. 
• Second, fast-track the Cooperative Bill 2024 and amendments to the Sacco Societies Act to close regulatory gaps, bring apex and non-DT saccos under a clearer supervisory hierarchy, and give the Commissioner and Sasra stronger powers to investigate and enforce. 
• Third, build the missing safety rails: a sector-wide Deposit Guarantee Fund, a Central Liquidity Facility, and a shared services framework to help smaller saccos meet governance, risk and technology standards without prohibitive costs. 

These measures are not about punishing cooperatives; they are about protecting members, minimising the risk of taxpayer-funded bailouts, and aligning a critical grassroots sector with the country’s broader economic and financial-stability goals. 

What Kuscco and apex bodies must do

Kuscco’s own crisis and ongoing recovery highlight both the dangers of weak oversight and the opportunity for apex institutions to lead sector repair. As Kuscco restructures, it should focus less on competing with its members for deposits and more on: 

• Setting enforceable governance benchmarks for member saccos and linking access to liquidity or services to demonstrable compliance. 
• Providing shared audit, risk and training services to help smaller societies get their books in order and run effective, law-abiding AGMs. 
• Championing the implementation of the Deposit Guarantee Fund and Central Liquidity Facility so that the cost of individual failures does not cascade across the movement. 

If Kuscco and similar bodies can reinvent themselves as disciplined stewards rather than opaque power centres, they will become part of the solution rather than another vulnerability. 

What individual saccos must change—now

The most decisive reforms must happen inside individual societies. Every sacco board and CEO should treat the current crackdown as a last warning and act on three fronts:

• Governance: Ensure independent, timely audits; hold AGMs or delegate meetings that actually scrutinise accounts; enforce term limits and competency criteria for directors; and publish simplified financial snapshots to members. 
• Risk and business model: Separate core savings-and-credit operations from speculative side ventures; adopt clear credit policies to limit insider and political lending; and regularly monitor portfolio quality and capital adequacy. 
• Member communication and education: Explain the sacco’s financial position, rights and protections in plain language; educate members on red flags—from chronic delayed audits to unexplained projects—so they can vote with their feet before crises erupt. 

Saccos that embrace this reset will not only survive tougher regulation—they will attract more savings as Kenyans look for trustworthy, locally rooted institutions in a volatile economy. Those that refuse to adapt will, and should, exit the stage. 

Kenya’s cooperative movement has helped millions weather shocks, invest in assets and build intergenerational resilience. The question now is whether the sector will match that economic contribution with an equally robust culture of transparency and accountability. Cleaning up 25,000 non-compliant societies is not just an administrative exercise; it is the price of preserving a model that, when done well, remains one of the country’s best bets for inclusive, bottom-up growth.