Over 12,000 saccos face deregistration over non-compliance as Oparanya cracks whip

More than 12,000 savings and credit cooperative societies are facing deregistration after failing to submit mandatory financial returns

Cooperative Cabinet Secretary Wycliffe Oparanya announced that the move is aimed at protecting millions of Kenyans from fraudsters operating through dormant or non-compliant Saccos.

Appearing before the Senate plenary on Wednesday, Oparanya revealed that only 2,000 of the over 14,000 registered Saccos in the country had complied with the legal requirement of filing annual returns.

“In the register of Saccos, we have about 14,000 Saccos, but if you look at the ones filing returns, they are very few,” Oparanya said.

“I directed the Commissioner of Cooperatives to write to all these Saccos and demand that they file their returns.”

The CS warned that thousands of the registered entities could merely exist on paper and may be used by fraudsters to swindle unsuspecting Kenyans.

“It means some of them are just there in name, but they are not doing anything,” he said.

Under the new directive, the ministry will publish in newspapers the names of Saccos that have complied with the law and updated their financial records.

The remaining non-compliant societies will then be given a 30-day ultimatum to regularise their status or face closure.

“We will give them 30 days to respond. If they don’t respond, we will assume they are either inactive, not existing or not operating. They will be deregistered,” Oparanya said.

The government will also involve banks in the crackdown to prevent fraudulent transactions through dormant Sacco accounts.

“We shall inform the bankers’ association to ensure that if any of the Saccos is holding bank accounts in any bank, those accounts should be closed so that they are not used to defraud Kenyans,” he added.

The CS said investigations had shown that some unscrupulous individuals were taking advantage of weak regulation and inactive Saccos to scam members of the public.

“If they are left that way, we have unscrupulous people who are using dubious Saccos to defraud Kenyans,” he said. “The decision I have taken is to ensure that Kenyans’ money in Saccos is safeguarded properly.”

The announcement comes at a time when the cooperative sector has come under increasing scrutiny following cases of mismanagement and financial losses.

Saccos play a critical role in Kenya’s economy, especially in mobilising savings and offering affordable credit to millions of wananchi. The sector has also become a key source of financing for small businesses, farmers and salaried workers.

At the same time, Oparanya announced that the government had lifted the suspension on the registration of new Saccos after introducing stricter regulations aimed at improving accountability and financial stability in the sector.

Under the new rules, individuals seeking to register a Sacco must meet several requirements, including proof of adequate capital and proper governance structures.

“Anybody who wants to register a new Sacco must follow the new guidelines,” Oparanya said. “They must have specific promoters and a bank account with at least Sh10 million to demonstrate viability.”

He added that applicants would also be required to develop proper by-laws and submit their documents through county cooperative directors before approval by the Commissioner for Cooperatives.

“There must be proper application procedures to ensure that we only register serious institutions that will protect the interests of members,” he said.

The ministry believes the reforms will restore public confidence in the Sacco movement and weed out fraudulent operators who have tainted the image of the cooperative sector.

INSTANT ANALYSIS

The crackdown by Wycliffe Oparanya reflects growing concern over weak oversight in Kenya’s cooperative sector, which has increasingly been linked to fraud and financial mismanagement. Deregistering dormant Saccos and freezing suspicious accounts could help protect savers and improve transparency. However, the exercise also exposes regulatory failures that allowed thousands of inactive entities to remain registered for years. The introduction of stricter registration conditions, including the Sh10 million capital requirement, is likely to curb briefcase Saccos but may lock out smaller community-based groups.