Oparanya Directs SACCO Mergers in Sweeping Cooperative Sector Reforms

FOLLOW US ON

Oparanya Directs SACCO Mergers in Sweeping Cooperative Sector Reforms

Cooperatives Cabinet Secretary Wycliffe Oparanya has called for the consolidation of small Savings and Credit Cooperative Organizations (SACCOs) across the country, saying mergers are necessary to save them from financial instability and long term sustainability.

Speaking on Thursday during the launch of the Sacco Supervision Report 2024, Oparanya noted that many Back Office Services Activity (BOSA)-only SACCOs are inactive while the few operating ones are financially unstable due to low membership.

“We must accept the reality that many BOSA-only SACCOs exist only on paper, while those that are active lack financial strength because they serve very few members,” he said. “The time has come for the sector to adopt market driven solutions through mergers and consolidations to secure their future.”

He directed officials of smaller SACCOs to start discussing possible mergers immediately and assured them that the Ministry will issue guidelines to support the process.

In addition to the merger directive, Oparanya announced new governance measures. SACCOs with more than 5,000 members will be required to adopt the delegate system for general meetings to strengthen decision making. He also said SACCOs will not be allowed to borrow externally to pay dividends, any external loan request must be approved by the Commissioner of Cooperatives.

Oparanya also questioned the viability of the current minimum registration requirement of ten members for SACCOs, hinting at a possible review to reflect the realities of the financial environment.

On the transport sector, he clarified that Matatu and PSV cooperatives registered as SACCOs do not meet the criteria as they do not mobilize deposits or provide credit services. He described them as business associations operating under the National Transport Safety Authority (NTSA).

To strengthen oversight, Oparanya directed Sacco Societies Regulatory Authority (SASRA) and the Commissioner of Cooperatives to tighten scrutiny of audited accounts. Going forward financial statements will be required to carry signatures from CEOs, finance officers and board members to ensure accountability.

The directives are a major push by the Ministry to streamline operations in the cooperative sector and address governance loopholes that have hindered growth and sustainability.

Also Read: Somalia’s Apology Backfires After Kenyan Flag Mounted Upside Down

Oparanya Directs SACCO Mergers in Sweeping Cooperative Sector Reforms