Organizations (SACCOs) in Kenya, Wycliffe Oparanya, the Cabinet Secretary for Cooperatives, Micro, Small, and Medium Enterprises (MSMEs), has called on the Sacco Society Regulatory Authority (SASRA) to regulate all SACCOs operating within the country. Oparanya emphasized the critical need for robust supervision, which would ensure the protection of members’ deposits and foster a more professional environment within the cooperative sector.
The State of SACCOs in Kenya
According to Oparanya, Kenya currently has 13,511 SACCOs operating in various sectors of the economy. However, only 357 SACCOs—equivalent to a mere 2.54%—are fully registered, regulated, and supervised by SASRA. This means that a vast majority, or 13,154 SACCOs, remain unregulated. Oparanya’s push for comprehensive regulation stems from a desire to enhance the safety of deposits and to ensure that these organizations are run with the same level of accountability as commercial banks.
The CS made these remarks during the 50th anniversary celebrations of Stima DT Sacco, a major player in Kenya’s SACCO sector. He noted that robust regulatory oversight would prevent financial mismanagement and misappropriation of funds, which has been a challenge in the cooperative sector in Kenya.
“Money in a cooperative SACCO should be as safe as money in the bank,” Oparanya stated. His declaration underscores the importance of trust and security in SACCOs, which have long been a popular option for many Kenyans who are unable to access traditional banking services.
Strengthening Regulatory Oversight
Oparanya’s remarks highlighted the importance of bringing all SACCOs under SASRA’s regulatory umbrella. Regardless of their size or capital base, every SACCO that collects money from members, Oparanya argued, must be regulated.
“All SACCOs must be regulated whether your share capital is Ksh 1 million, Ksh 100 million, or Ksh 1 billion. Every SACCO that collects money from people or members must be regulated by SASRA,” he affirmed.
Currently, SACCOs regulated by SASRA boast a combined membership of 6.84 million Kenyans. These SACCOs manage deposits amounting to Ksh 687 billion and have a loan portfolio valued at Ksh 758 billion. While this highlights the immense financial contribution of SACCOs to the Kenyan economy, the unregulated portion of SACCOs presents risks to the broader financial system, especially in terms of liquidity, solvency, and operational risks.
To mitigate these risks, Oparanya has urged SASRA to adopt advanced technology to track SACCO operations and ensure that all organizations maintain a liquidity ratio of 15% at all times. This ratio would act as a safety net to ensure that SACCOs have sufficient cash reserves to meet their short-term obligations, thus avoiding the risk of a liquidity crunch.
Role of SACCOs in Economic Empowerment
Oparanya also praised SACCOs like Stima DT Sacco for their role in economic empowerment, particularly for MSMEs, which often face difficulties in accessing traditional forms of credit. The cooperative model, according to Oparanya, democratizes access to financial resources, allowing individuals and businesses to access capital, savings, and loans at more favorable terms than those offered by commercial banks.
“Cooperatives like Stima DT Sacco are key drivers of economic empowerment, especially for MSMEs who face challenges in accessing traditional credit. The cooperative model allows us to democratize access to financial resources, contributing to Kenya’s broader development agenda,” he added.
This emphasis on SACCOs as a pillar of MSME growth highlights their potential to play a central role in Kenya’s economic transformation. By providing affordable financial services to underserved segments of the population, SACCOs enable MSMEs to expand their businesses, create jobs, and stimulate economic growth.
Stima DT Sacco’s Growth and Innovation
Stima DT Sacco, one of Kenya’s largest SACCOs, celebrated its golden jubilee with an impressive record of achievements. Since its founding in 1974, the SACCO has grown into the second-largest cooperative in Kenya, boasting an asset base of Ksh 62 billion and a membership of 217,000 individuals. Its success, according to Oparanya, is a testament to the importance of professionalism, sound management practices, and innovation.
Chief Executive Officer of Stima DT Sacco, Dr. Hassan Gamaliel, outlined the SACCO’s strategic plan for continued growth. According to Dr. Gamaliel, the SACCO is committed to leveraging cutting-edge technologies such as artificial intelligence (AI) and blockchain to enhance the efficiency and accessibility of its services. This focus on innovation will allow the SACCO to remain competitive in an increasingly digital world while ensuring that its members can achieve their financial goals.
“Our digital transformation goes beyond keeping up with trends—it’s about creating a seamless, personalized experience for our members, no matter where they are. We are not just a service provider; we are your partner, empowering you to reach your financial goals,” said Dr. Hassan.
Additionally, Stima DT Sacco has committed to integrating Environmental, Social, and Governance (ESG) principles into its operations. This commitment aligns with a growing global trend in which businesses and financial institutions are increasingly focusing on long-term sustainability and the social impact of their operations.
Call for SACCO Mergers and Industry Consolidation
Oparanya’s call for the regulation of all SACCOs was accompanied by a push for industry consolidation, particularly through mergers of large SACCOs. He proposed that SACCOs merge to create stronger, more resilient organizations capable of undertaking large-scale projects.
“We want to encourage mergers. Imagine if the top 10 SACCOs merged into one. These stories we are hearing about the airport will not be here again because the 10 SACCOs will be able to build even 10 airports in this country without a problem,” Oparanya remarked.
This proposal highlights the potential of SACCOs to pool resources and contribute to the country’s infrastructure development. By merging, SACCOs could have the financial strength and capital base needed to fund significant projects, such as the construction of airports, hospitals, or affordable housing.
Mergers would also allow SACCOs to benefit from economies of scale, reduce operational costs, and offer better services to members. Furthermore, consolidated SACCOs would be in a stronger position to compete with commercial banks and other financial institutions, providing members with more competitive rates on savings and loans.
The Future of SACCOs in Kenya
Oparanya’s push for the regulation and consolidation of SACCOs marks a significant step toward improving governance, professionalism, and efficiency within Kenya’s cooperative sector. With a regulatory framework in place and advanced technologies to support their operations, SACCOs have the potential to drive economic growth, particularly for MSMEs and underserved populations.
As SACCOs like Stima DT Sacco continue to innovate and expand their services, they will play an increasingly important role in Kenya’s financial landscape. Their ability to adapt to new challenges, embrace technological advancements, and prioritize sustainability will be critical to their continued success.
In conclusion, the SACCO sector in Kenya stands at a crossroads. With the right regulatory environment, a commitment to innovation, and a focus on member-centric services, SACCOs can contribute significantly to the country’s economic growth, financial inclusion, and social development. The future looks promising, but only if all players in the sector commit to professionalism, transparency, and sustainability.
