The government has pledged to fast-track the long-awaited reforms aimed at revitalizing Kenya’s co-operative sector and entrenching good governance to protect millions of members’ savings.
To achieve this, new policy and legal frameworks are being designed to seal loopholes that have long allowed fraud, corruption and mismanagement of hard-earned members’ deposits.
Cabinet Secretary for Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Wycliffe Oparanya said the reforms would be anchored in the proposed Co-operatives Bill, 2024, which has been approved by both Houses of Parliament and is expected to be enacted next year.
Oparanya said the new legislation, to be aligned with the Constitution, would overhaul the existing Co-operatives Act and address the structural challenges that have weakened the sector.
“The new Co-operative Bill has passed both Houses of Parliament, and we expect it to be enacted by March next year, once the mediation team gives its final approval,” he said.
He spoke during the 4th Annual Co-operative and SMEs Conference in Naivasha, where he announced a raft of measures intended to strengthen the co-operative movement.
Oparanya said the government has embarked on an ambitious coffee-sector reform programme targeting production of 150,000 metric tonnes by 2029, up from the current 50,000 metric tonnes.
He added that raising export volumes would improve farmers’ earnings and increase foreign exchange inflows adding that a steering committee has already been established to guide the reforms, which would be implemented through the Kenya Planters Co-operative Union.
He said that part of the coffee-sector overhaul would involve modernizing processing machinery and encouraging domestic consumption, which currently stands at just five per cent.
The CS also said the government would restructure the New Kenya Co-operative Creameries (KCC) to improve efficiency and resolve chronic delays in farmers payments.
“KCC is currently struggling to pay farmers for milk supplied, and the government is working on a privatization programme to address these challenges,” he said.
He noted that delayed payments were hurting dairy production and that the State is working urgently to clear outstanding debts.
Oparanya further confirmed that the Ministry has suspended the registration of new SACCOs, citing widespread financial instability.
He noted that many SACCOs emerge during election cycles only to collapse soon after, prompting scrutiny from the Senate which the Ministry is prepared to address.
He said the Ministry intends to amend the Sacco Societies Act, 2008 to align it with the Constitution and strengthen regulatory oversight.
He expressed concern over growing cases of unremitted employee deductions owed to SACCOs, which now total Sh3.5 billion, largely from counties and national universities.
To safeguard members’ savings, Oparanya announced that the government would introduce a Deposit Guarantee Fund to protect deposits in SACCOs that become bankrupt or financially insolvent due to mismanagement.
At the same time, he said a stabilization fund has also been activated to strengthen the financial independence and governance of local co-operatives while given financial autonomy to Cooperative Association of Kenya.
With smaller SACCOs struggling to afford modern technological systems, Oparanya said the Ministry is harmonising new regulations to create a centralized technology platform that would be shared across the co-operative sector.
Principal Secretary for Co-operatives Patrick Kilemi revealed that only 4,900 out of more than 30,000 co-operatives have filed returns in the past three years.
“Some of these SACCOs have failed to file audited accounts and have ignored Ministry directives, and it is time action is taken,” he said.
By Erastus Gichohi
