Saccos have rejected a proposed law that wants smaller cooperatives merged warning that such a move will cause job losses.
They say the proposed Sacco Societies (Amendment) Bill, 2025 will also cripple small cooperative societies and undermine grassroots financial inclusion if passed in its current form.
The Bill, currently before the Senate, threatens the survival of smaller Saccos through a clause that compels those with deposits below Sh100 million to merge with larger institutions.
Speaking during the opening of a new branch of Ammar Sacco in Kangema, Murang’a county, Sacco officials urged Parliament to reject the proposal, saying it has already created uncertainty among members and shaken confidence in the sector.
Ammar Sacco chairperson Jeremiah Njoroge said many members are anxious over the proposed changes, with fears growing that their savings may be jeopardised if forced mergers proceed.
“Since the Bill was introduced, many of our members have grown cold feet because they are apprehensive of their money’s safety,” Njoroge said.
He said the government should focus on strengthening oversight and supporting smaller Saccos to expand sustainably rather than asking them to merge. Njoroge said most of the small institutions have built strong member trust over decades.
“Saccos are formed around common economic interests such as farming or trade, creating a sense of ownership and identity among members that could be eroded through mergers,” he said.
Many rural residents rely on small Saccos as their primary source of affordable credit, savings products and financial literacy, especially in areas underserved by commercial banks.
“Most Saccos are formed based on one idea that connects them to members such as farming. This is why we want MPs to make decisions that empower the people at the grassroots instead of destabilising them,” he said.
East African Legislative Assembly member Maina Karobia, who presided over the launch, also criticised the Bill, terming it inconsistent with Kenya’s liberal economic model. The lawmaker warned the proposed law could stifle enterprise by limiting the ability of Kenyans to establish and grow financial cooperatives.
Karobia said forcing small institutions into mergers would likely result in job losses across the cooperative movement and weaken localised financial structures that have supported entrepreneurship and household growth for decades.
“Many Kenyans have greatly benefited from saccos. Beyond deposits and withdrawals, they train members, support businesses and have transformed many lives,” Karobia said.
The Sacco Societies (Amendment) Bill, 2025 was tabled in the Senate as part of broader reforms aimed at tightening regulation of the cooperative financial sector and enhancing depositor protection amid growing concerns over governance failures in some saccos.
Among its key proposals is the establishment of secondary saccos—umbrella institutions that would bring together smaller societies for shared services, liquidity support and compliance infrastructure.
The Bill also seeks to establish a Central Liquidity Facility and operationalise a Deposit Guarantee Fund to cushion members in the event of sacco collapse.
Proponents of the Bill argue that the reforms are necessary to professionalise the sector, reduce the risk of collapse among weak institutions and improve consumer protection.
Critics however say the measures disproportionately burden smaller community-based saccos and may centralise control in a way that disadvantages rural and specialised cooperatives.
The Bill has undergone the First Reading in the Senate and is currently under committee review before progressing for further debate.
Kenya has one of the strongest cooperative sectors in Africa, with saccos mobilising trillions of shillings in savings and serving millions of members across the country.
The movement contributes significantly to national savings, credit access and grassroots enterprise.
Unlike commercial banks, many saccos are deeply embedded in rural communities and are structured around common economic or social interests, allowing them to tailor services to members’ needs.
