Sacco Societies Amendment Bill 2025: What It Means for Every Kenyan Sacco Member

By Kenya Political Desk | July 5, 2026 | Parliament, Policy & Legislation, Economy

NAIROBI, Kenya — A far-reaching piece of legislation that could reshape how Kenya’s savings and credit co-operative sector operates is quietly working its way through Parliament. The Sacco Societies (Amendment) Bill, 2025 — gazetted on June 30, 2025 and received by the National Assembly on July 23, 2025 — was tabled by National Assembly Majority Leader Kimani Ichung’wah and proposes sweeping changes to Cap. 490B, the principal Sacco Societies Act.

With over 176 licensed deposit-taking Saccos in Kenya, managing assets worth more than Ksh 1 trillion and serving millions of ordinary Kenyans, any amendment to the law that governs them deserves close public scrutiny. Here is everything you need to know.

Why the Bill Was Introduced

The Bill’s memorandum of objects states three core purposes: to provide for the establishment and regulation of secondary Sacco societies that can conduct central liquidity and shared services business; to operationalise the long-dormant Deposit Guarantee Fund; and to align the governance and appointment of the Fund’s Board of Trustees with international best practices.

In plain terms, this Bill is about two things — building a financial safety net for Sacco members should their Sacco collapse, and creating a new category of Sacco-to-Sacco financial infrastructure that could transform how the sector moves money.

What Is a Secondary Co-operative Society?

One of the Bill’s most significant innovations is the formal introduction of the concept of a secondary co-operative society — a new institutional layer in Kenya’s Sacco architecture.

Under the Bill, a secondary co-operative society is defined as a co-operative registered under the Co-operative Societies Act whose membership is restricted to primary Sacco societies, and which carries on central liquidity and shared services business. At least 30 licensed Sacco societies would need to come together to form one.

Once licensed by the Sacco Societies Regulatory Authority (SASRA), such a body would be authorised to hold and maintain liquidity reserve accounts for each member Sacco, take deposits from member Saccos, invest in government securities, offer short-term lending between member Saccos, participate in the inter-bank market (subject to CBK compliance), settle payment transactions, issue payment instruments, facilitate trade finance including performance guarantees, and offer intermediary services for both domestic and international money transfers.

What it cannot do is equally important — the Bill expressly prohibits a secondary co-operative society from transacting in deposit-taking with natural persons, lending to individual members of the public, undertaking wholesale or retail trade, or investing in venture capital.

This is a Sacco-for-Saccos institution — not a new bank for ordinary citizens.

The Deposit Guarantee Fund: Finally Getting Teeth

Perhaps the most consequential provision for ordinary Sacco members is the operationalisation of the Deposit Guarantee Fund — a consumer protection mechanism that has existed in law but has never been meaningfully activated.

Under the existing law and the proposed amendments, the Fund would protect each Sacco member’s deposits up to Ksh 100,000 in the event that their Sacco’s licence is revoked or the society becomes insolvent. The Fund would not protect shares, only deposits.

The Bill amends Section 59 to clarify the claims process: upon revocation of a Sacco’s licence or authorisation, an affected member may lodge a claim with the Deposit Guarantee Fund in the prescribed form within the prescribed time. However, a new section — Section 59A — makes clear that no payments from the Fund shall begin until the Cabinet Secretary responsible for finance formally appoints and gazettes a commencement date for such payments, in consultation with the Cabinet Secretary responsible for Sacco societies.

This is a critical clause. It means that even after a Sacco collapses and a member files a claim, the government retains full discretion over when payouts begin. Critics may argue this introduces political risk into what should be a purely technical process.

The Board of Trustees may also refuse to compensate any person found to have directly or indirectly benefited from the circumstances that caused the Sacco to be shut down — a provision aimed at protecting the Fund from insider exploitation.

Governance of the Deposit Guarantee Fund Board

The Bill also overhauls who sits on the Board of Trustees of the Deposit Guarantee Fund, bringing its composition closer to international regulatory standards.

Under the proposed amendments, the Board will be chaired by a non-executive chairperson appointed by the President — a person with at least 15 years of professional experience in banking, supervision and regulation of financial institutions, insurance, commerce, law, accountancy, or economics.

Other members of the reconstituted Board will include the Principal Secretary to the National Treasury or a representative, the Principal Secretary responsible for Sacco societies or a representative, and four independent members — two nominated by the duly registered secondary co-operative society representing the majority of Saccos, and two appointed by the Cabinet Secretary by virtue of their expertise in co-operative or banking financial supervision and regulation.

Critically, the Bill disqualifies from Board membership any person who is a serving officer of a Sacco society, a partner or associate of a current or recent Sacco auditor, or anyone who does not meet the requirements of Chapter Six of the Constitution — the chapter that deals with leadership and integrity.

Penalties for Non-Compliance

The Bill does not limit itself to enabling powers. It introduces real legal consequences for violations. Any person who contravenes the provisions of the new Part IIIA — governing central liquidity and shared services business — commits an offence and is liable on conviction to a fine not exceeding Ksh 3 million, or imprisonment for a term not exceeding five years, or both.

SASRA itself is also given expanded supervisory powers, including the authority to conduct on-site and off-site supervision of secondary co-operative societies, assess the suitability of persons managing them, approve boards and senior officers before appointment, and review annual audited accounts.

What This Means for Ordinary Sacco Members

If the Bill passes in its current form, here is what changes practically:

The Deposit Guarantee Fund, for the first time, would have a clear and operational claims process — giving members of a failing Sacco a defined path to recover up to Ksh 100,000 of their deposits. For millions of Kenyans whose entire savings sit inside a single Sacco, this is meaningful protection.

The creation of licensed secondary co-operative societies introduces the possibility of a centralised liquidity buffer for the sector — meaning that if one Sacco faces a short-term cash crisis, it can borrow from the secondary society rather than freeze member withdrawals. This could prevent the kind of Sacco collapse that has wiped out member savings in the past.

However, the Bill’s effectiveness will ultimately depend on SASRA’s regulatory capacity and political will at Cabinet level to operationalise the Fund’s payout mechanisms without delay.

Key Facts at a Glance

🔗 For More Information

• SASRA — Sacco Societies Regulatory Authority
• National Assembly of Kenya — Bills Tracker
• Kenya Gazette — Official Supplement
• Co-operative Societies Act Cap. 490 — Kenya Law
• Central Bank of Kenya — Financial Sector Oversight
• Kenya Union of Savings and Credit Co-operatives (KUSCCO)