For many Kenyans, SACCOs are more than just savings institutions. They provide a reliable place to save money, access affordable loans, and meet urgent financial needs.
It is for this reason that Members of Parliament are calling for stronger protection of members’ savings as lawmakers consider changes to the laws governing the cooperative sector.
The debate emerged as the National Assembly Departmental Committee on Trade, Industry and Cooperatives reviewed the Sacco Societies (Amendment) Bill, 2025 during a meeting with officials from the SACCO Societies Regulatory Authority (SASRA) on Tuesday, June 30.
While the committee welcomed efforts to strengthen the sector, members expressed concern over a proposal that would cap compensation for members of collapsed SACCOs at Ksh100,000.
According to the legislators, the proposed compensation limit may not adequately protect members who have accumulated larger savings over the years.
They argued that many Kenyans trust SACCOs with substantial amounts of money and would suffer significant financial losses if compensation is restricted to the proposed amount.
The lawmakers urged SASRA to consider a more balanced deposit insurance system that reflects the amount each member has saved instead of applying a flat compensation limit.
They said such an approach would better protect depositors while increasing confidence in the cooperative movement.
The proposed Bill seeks to establish a Deposit Insurance Fund that would compensate members of insolvent SACCOs.
Under the proposed framework, the amount eligible for compensation would be determined by calculating a member’s total credit balance across all SACCO accounts before deducting any outstanding loans, liabilities, or loan guarantee obligations.
Once those obligations have been settled, affected members would be allowed to submit claims to SASRA for payment from the insurance fund.
If Parliament approves a higher compensation limit, members of regulated SACCOs would receive greater financial protection in the event their institutions fail.
Lawmakers believe this would encourage more Kenyans to continue saving through SACCOs without fear of losing most of their deposits.
The Bill also proposes stronger supervision and oversight of SACCOs to improve the safety of members’ savings and promote the long-term stability of the cooperative sector.
SASRA Chief Executive Officer David Sandagi told the committee that the planned reforms, including the creation of the Deposit Insurance Fund, would strengthen public confidence in regulated SACCOs while making supervision more effective.
Sandagi also said the proposed law encourages the use of shared technology and digital platforms, a move expected to help smaller SACCOs lower operating costs, improve efficiency, and meet regulatory requirements more easily.
Members of Parliament cautioned SASRA against introducing unnecessary administrative requirements that could make it harder for SACCOs to operate.
They urged the regulator to ensure the proposed law remains practical and flexible enough to support the changing needs of Kenya’s cooperative sector while protecting the interests of members.
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