New law to regulate Sacco operations

The Government has drafted a law that will address governance and regulatory issues affecting savings and credit co-operative societies (Saccos).

The Sacco Regulatory Bill has been drafted and will be tabled in Parliament soon.

This disclosure was made by President Kibaki during the centenary celebrations of the co-operative movement, at KICC, on Friday.

"Growth and development of Saccos has been constrained by lack of appropriate legal and regulatory framework," said Kibaki.

The new law will enact provisions on issues of financial propriety, good governance, prudential standards and disclosures.

It will also facilitate creation of a deposit protection fund to safeguard interests of Sacco members.

As part of the recovery programme, the Government through the Ministry of Co-operative Development and Marketing, has revived 734 dormant or collapsed co-operative societies.

It is currently working on reviving the moribund Kenya Farmers Association (KFA) and other failed co-operatives.

Most of these Saccos went under during in 1970’s and 1980’s at the onset of liberalisation. Others were buried by mismanagement and theft of members’ funds.

Already, the Government has recovered Sh 3.2 billion in unremitted dues by employers belonging to various savings and co-operative societies (saccos) members, over the last six years.

"We have already appointed commercial banks as agents to follow up defaulting employers and recover the balance of Sh 1.3 billion," Kibaki said. This recovery has tremendously rejuvenated the affected Saccos, especially those that were on the verge of collapse. With a total wealth of Sh 200 billion, Saccos are key players in the economy, especially banking, insurance, transport and agro-processing.