CS Oparanya orders SACCO mergers, tightens governance rules to safeguard members’ finances

Cooperatives Cabinet Secretary Wycliffe Oparanya has ordered small SACCOs with limited membership to merge with larger ones, in a bid to boost financial stability and strengthen governance across the sector.

Speaking on Thursday during the launch of the Sacco Supervision Report 2024, Oparanya said many Back Office Services Activity (BOSA)-only SACCOs are either inactive or struggling to survive, making them difficult to regulate.

“We must face the reality that there are so many BOSA-only SACCOs spread across the country, but which are inactive and only exist on paper. The few active ones are neither stable nor financially viable because they serve just a few members,” the CS said.

He directed SACCO officials to immediately begin talks on mergers, stressing that consolidation is the only way to guarantee financial viability. To facilitate the process, the Ministry will release guidelines to aid amalgamations.

Oparanya further directed SACCOs with more than 5,000 members to adopt the delegate system for effective decision-making in general meetings. He also barred SACCOs from borrowing externally to pay dividends, noting that any external borrowing must first get written approval from the Commissioner.

The CS also hinted at revising the minimum membership requirement for SACCO registration, currently set at ten, questioning its sustainability under the current financial environment.

Turning to transport cooperatives, Oparanya said many matatu and PSV SACCOs are not genuine cooperatives since they do not mobilize deposits or offer credit, but simply operate transport businesses under NTSA regulations. He called for further streamlining of their operations.

Meanwhile, the Sacco Societies Regulatory Authority (SASRA) and the Commissioner of Cooperatives have been directed to tighten oversight, requiring audited financial statements to be signed off by CEOs, finance officers, and board members to boost accountability.