For two days last week, Mary Wambui, a high school teacher in Nairobi could barely sleep.
Her mind constantly raced back to her digital statement from her sacco, where her savings of more than Sh670,000 sat snugly.
She has steadily built the nest egg over 14 years through chalk, sweat and dust, with savings of about Sh4,000 every month and random extra deposits whenever she makes an extra coin from tuition charges. The intention was to use the cash as collateral for a land purchase to build a retirement home.
But a viral graphic on social media changed everything. The post claimed that the government was planning to tap into Sh1 trillion of sacco savings to finance the newly established National Infrastructure Fund.
The fund is an ambitious state-sponsored investment vehicle established by the National Infrastructure Fund Act, 2026, to mobilise up to Sh5 trillion over the next decade to finance major national development projects.
"I panicked. It was even worse reading through the comments," Wambui recalls.
"We have heard stories of government projects stalling, and the thought of my money being taken to build roads without my permission terrified me. I reached out to the sacco with an intention to withdraw my savings even if it would come with penalties, but I was told all was well.”
Nicholas Amolo, a member of a prominent sacco in the energy sector, was planning a different line of defence. If the state was going to take the money, he reasoned, he might borrow against all his savings.
"The moment I saw the news on television, I immediately decided to apply for a development loan," Amolo told the Star.
"I figured that if I borrowed three times my savings immediately, the government would find an empty kitty. I would rather be servicing a heavy loan for money I am spending on a project than waiting for the government to return money they spent on projects."
The two were not alone. Across the country, a quiet but dangerous wave of panic was sweeping through Kenya’s financial bedrock.
Automated teller machines at major saccos reported unusually high traffic. Customer care lines were jammed, and boardrooms across Upper Hill and the Nairobi Central Business District began ringing alarm bells. The trouble? The information fuelling the frenzy was entirely fake.
The crisis, which threatened to destabilise a sector that holds the financial dreams of over 14 million Kenyans, stems from a mix of highly publicised legislative reforms and malicious digital propaganda.
At the centre of the storm are two distinct pieces of legislation currently in Parliament: the Cooperatives Bill and the Sacco Societies (Amendment) Bill, 2025.
Because the two bills are being fast-tracked for enactment, social media opportunists have been blamed for taking advantage of the technical language in the drafts to weave a narrative of an impending state-sponsored heist.
The misinformation was supercharged when a fabricated digital graphic was widely circulated, falsely attributing a quote to National Treasury Cabinet Secretary John Mbadi.
The “fake post”, as per the industry players, alleged that the upcoming laws would create a state-controlled "Super Sacco” that would legally compel primary cooperatives to surrender their cash reserves to fund national road, bridge and dam projects.
The Treasury, the Ministry of Co-operatives, the National Assembly, and the sector's apex body, the Cooperative Alliance of Kenya (CAK) have however moved to reassure millions of sacco members that the proposed reforms will not allow the state to access members' savings.
Neither will they compel saccos to finance government infrastructure projects.
"We wish to clarify that the information circulating on social media regarding the government borrowing sacco savings for the National Infrastructure Fund is entirely fake and malicious,” the Treasury said.
"Cabinet Secretary John Mbadi has made no such statement. The public is advised to ignore this fabricated graphic and rely only on official communication channels for accurate updates."
Cooperatives PS Patrick Kilemi has since reminded Kenyans that by law, the government cannot simply dip its hands into the vaults of private cooperatives.
“Sacco funds remain the property of respective saccos and are managed exclusively by their elected officials. The government of Kenya has no access to these funds, neither does it intend to utilise them. At no point did the government propose using these funds for projects. They funds are safe, autonomous, and strictly protected,” Kilemi said.
The Cooperative Alliance of Kenya also assured sacco members and other cooperatives in the different sectors of the economy that their savings are safe.
CAK chief executive Daniel Marube said the Sh1 trillion being talked about does not exist as idle cash sitting in a giant room waiting to be taken.
"These are members' savings that have already been converted into loans financing homes, businesses, education, agriculture, healthcare, and transport across the country,” Marube said.
“These resources remain in the hands of members, supporting livelihoods and economic growth, and cannot simply be diverted for unrelated purposes."
Marube said remarks made by Deputy President Kithure Kindiki during the recent Ushirika Day celebrations had been twisted out of context.
The Deputy President, he said, had merely suggested that the National Infrastructure Fund would ease pressure on the national budget, thereby freeing up fiscal space to provide more developmental grants to small businesses and cooperatives.
However, Saccos are free to invest in long-term instruments, including bonds, only if members approve.
Marube emphasised that cooperatives remain autonomous, member-owned institutions whose investment decisions are made solely by members through their democratic governance structures, with annual general meetings remaining the supreme decision-making organs.
He cautioned against misinformation, warning that misleading reports could undermine public confidence and trigger unnecessary panic among millions of cooperative members.
Kenya’s sacco sector is the largest cooperative movement in Africa and ranks seventh globally.
It is an economic giant that sits at the heart of the country's Gross Domestic Product (GDP), traditionally offering loans at friendlier, capped interest rates compared to commercial banks, and require multipliers of savings rather than stringent physical collateral.
They are the primary financial lifeline for Kenya's middle class, civil servants, farmers, and micro-entrepreneurs.
According to sector players, any systemic panic that causes members to aggressively withdraw their deposits could trigger a liquidity crisis that would instantly reverberate through the entire economy.
The National Assembly’s Committee on Trade, Industry and Cooperatives, which has been reviewing the Sacco Societies (Amendment) Bill for over a year, following its initial publication, has dismissed claims of government overreach as “myths”.
The committee said the bill does introduce a framework for a "secondary sacco society," but its architecture is strictly designed for backend efficiency.
Its membership is limited exclusively to primary saccos (not individuals) and is legally prohibited from lending money to natural persons, and it cannot lend money to the government outside of standard investment channels.
Instead, it acts as a central clearinghouse providing shared technological infrastructure, payment systems, and liquidity inter-lending windows to help smaller Saccos cut down their operational costs.
On concerns over the state appointing sacco managers, Parliament has since clarified that the bill does not contain such provisions.
“Governance remains deeply democratic. Internal management boards will continue to be elected strictly by the members during annual general meetings. The only new body created is a board of directors for the secondary sacco, which will be voted on by the member saccos themselves, with zero state interference in approvals or rejections.”
On the much-debated Sh100,000 cap on savings protection, the legislative intent is exactly the opposite, the committee said.
The draft bill instead strengthens depositor protection by establishing a robust statutory Deposit Insurance Fund.
“This framework creates a guaranteed legal avenue for members to lodge claims and get compensated if a license is ever revoked, moving far away from arbitrary limits and providing a safety net similar to the Kenya Deposit Insurance Corporation framework used by commercial banks,” the committee, chaired by Ikolomani MP Bernard Shinali, said.
Parliament has also confirmed that the proposed law preserves all existing constitutional and contractual rights of members. The statutory right to exit a sacco and access accumulated savings remains completely untouched.
Co-operatives CS Wycliffe Oparanya said the Cooperative Bill will strengthen governance by clearly defining the roles of the national and county governments, addressing long-standing institutional challenges that have slowed the sector’s growth.
“The proposed law, alongside amendments to the Sacco Societies Act, 2008, will improve accountability, modernise the regulatory framework and align Kenya’s cooperative sector with international best practices,” Oparanya said.
Fraudulent pyramid schemes have frequently styled themselves as "cooperatives" to fleece unsuspecting Kenyans, while small, rural-based saccos have struggled to stay afloat due to the high costs of setting up digital banking systems.
To solve these issues, the new laws introduce strict structural protections among them being restricting the name "sacco" making it a criminal offense for any unregistered or unqualified entity to use the designation thus locking out fraudulent outfits.
There is also a four-tier system where the sector will be neatly organised into primary societies, secondary societies, cooperative federations, and an overarching apex organisation to streamline operations and eliminate messy duplications.
Financial stability and liquidity management for large deposit-taking Saccos will also be brought under a closer regulatory framework involving the Central Bank of Kenya alongside the Sacco Societies Regulatory Authority (SASRA).
The Sacco Bill fully embraces modern technology by legally legitimising virtual and hybrid AGMs, lowering administrative expenses and allowing members in the diaspora to vote on crucial decisions.
Parliament has extended an olive branch to the public, urging cooperative members to ignore the “digital noise” and actively submit their views to the House committee before the public participation phase closes.
Since the legislation touches on devolved functions, it will head to the Senate for further scrutiny before moving to the President for assent.
