NAIROBI,
The government has announced major reforms for Savings and Credit Cooperative Organisations (SACCOs), including a deposit guarantee fund to protect members’ savings if an institution collapses.
Cooperatives Principal Secretary Patrick Kilemi unveiled the changes Friday, saying they are designed to restore confidence in the sector amid growing concerns over financial mismanagement in some SACCOs.
The proposed fund will mirror the deposit protection system used in commercial banking, where customers are guaranteed compensation of up to Ksh500,000 if a bank becomes insolvent.
“When you talk about deposit guarantee funds, it is deposit insurance,” Kilemi said. “We have it within our banking sector that if a bank goes down, depositors are guaranteed to be refunded a minimum of Ksh500,000.”
He said the reforms will be embedded in updates to the Sacco Societies Regulatory Authority (SASRA) Act within the next six months.
“In the next six months, we can say with confidence that we have a new legal setup on matters related to the SASRA Act,” Kilemi added.
The reforms aim to bring SACCOs in line with banking industry standards, offering millions of Kenyans who rely on cooperatives for savings and loans the same safety nets long available to bank customers.
By James Kisoo
