State Tightens Grip on SACCOs as Sector’s Asset Base Hits Sh1 Trillion

Nairobi, Kenya — September 26, 2025 (EAT).

The government is moving to strengthen regulation over Kenya’s Savings and Credit Cooperatives (SACCOs) as the sector’s regulated asset base surpasses KSh 1.076 trillion (now around KSh 1.14 trillion as of August 2025), prompting new directives on mergers, external borrowing, and oversight. 

The Latest Moves

• Cooperatives & MSMEs Cabinet Secretary Wycliffe Oparanya announced that small SACCOs with deposits under KSh 100 million will be required to merge with larger ones to ensure stability and compliance. 

• The directive also affects transport SACCOs, which will be rebranded as transcoops unless they undertake financial intermediary business, aligning their operations with regulatory standards. 

• SACCOs will only be allowed to seek external funding with the approval of the regulator, and borrowing to pay dividends will not be permitted unless expressly cleared. 

• The plan includes encouraging shared services, consolidation, and possibly involuntary mergers, especially among smaller SACCOs whose balance sheets are thin and weak. 

Context & Sector Profile

• According to the SACCO Supervision Annual Report 2024, regulated SACCOs’ combined assets reached KSh 1.076 trillion at end-2024, growing further to KSh 1.14 trillion by August 2025. 

• There are 355 registered SACCOs, including 177 deposit-taking SACCOs (DT-SACCOs) and 178 non-withdrawable deposit SACCOs (NWDT-SACCOs). 

• Of those, 216 SACCOs have relatively small assets (below KSh 1 billion), collectively holding about KSh 79.7 billion, just 7.4% of total regulated assets. 

• The number of SACCOs has slightly declined in recent years: from 359 (2022) to 355 (2024). 

Risks, Implications & Stakeholder Impact

Opportunities & Benefits

• Mergers and shared services may yield economies of scale, better risk management, and stronger financial resilience for the sector.

• Stricter supervision may improve governance, reduce fraud, and foster confidence among members and investors.

• Regulated access to external capital (with oversight) may help SACCOs grow their lending capacity while maintaining prudence.

Potential Risks & Challenges

• Smaller, undercapitalized SACCOs may struggle to merge or comply, risking exclusion or closure.

• The enforcement of involuntary mergers or borrowing limits could face resistance or legal pushback from affected SACCOs.

• Some SACCOs currently operating in weaker “BOSA-only” categories (below KSh 100 million) remain outside SASRA regulation and may be vulnerable to closure. 

• Members may fear loss of local identity, control, or favoritism when small SACCOs are merged into larger ones far from their base.

What We Don’t Yet Know

• The timeline for implementing the mergers and regulatory reforms.

• Criteria and process for choosing which SACCOs are forced to merge.

• How many SACCOs will cease operations or be deregistered under the new regime.

• The level of compensation or transition support for members of merged or closed SACCOs.

• How this will affect liquidity and services (loan disbursements, interest rates, dividends) in the short term.

Timeline

• 2023–2024: SACCO sector growth accelerates, with assets reaching over KSh 1 trillion.

• September 25, 2025: CS Oparanya and SASRA unveil SACCO Supervision Report 2024 and issue the new directives. 

• August 2025: Asset base reported at KSh 1.14 trillion. 

What to Watch

• Publication of detailed merger and regulatory guidelines to SACCOs.

• Responses from SACCO leadership and member cooperatives—whether they embrace or resist.

• Legal challenges to involuntary mergers or borrowing constraints.

• Effect on loan processing, dividends, liquidity, and member confidence across SACCOs in transition.

• How this reform aligns with Kenya’s financial inclusion and cooperative development goals.