Naivasha: 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.
According to Kenya News Agency, 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 stated that the reforms would be anchored in the proposed Co-operatives Bill, 2024, approved by both Houses of Parliament and expected to be enacted next year.
Oparanya explained that the new legislation, aligned with the Constitution, would overhaul the existing Co-operatives Act and address the structural challenges that have weakened the sector. He mentioned that the Co-operative Bill has passed both Houses of Parliament and is expected to be enacted by March next year, pending the mediation team's final approval.
Speaking at the 4th Annual Co-operative and SMEs Conference in Naivasha, Oparanya announced a series of measures intended to strengthen the co-operative movement. The government has embarked on an ambitious coffee-sector reform program targeting a production increase to 150,000 metric tonnes by 2029, up from the current 50,000 metric tonnes. The reforms aim to improve farmers' earnings and increase foreign exchange inflows, with a steering committee established to guide the implementation through the Kenya Planters Co-operative Union.
Oparanya noted that part of the coffee-sector overhaul involves modernizing processing machinery and encouraging domestic consumption, which currently stands at just five percent. The government also plans to restructure the New Kenya Co-operative Creameries (KCC) to improve efficiency and resolve chronic delays in farmers' payments. He mentioned that the government is working on a privatization program to address challenges faced by KCC, which is struggling to pay farmers for milk supplied.
The Ministry has suspended the registration of new SACCOs due to widespread financial instability. Oparanya highlighted that many SACCOs emerge during election cycles only to collapse soon after, prompting scrutiny from the Senate, which the Ministry is prepared to address. The Ministry intends to amend the Sacco Societies Act, 2008, to align it with the Constitution and strengthen regulatory oversight.
Growing cases of unremitted employee deductions owed to SACCOs, totaling Sh3.5 billion largely from counties and national universities, have raised concerns. To safeguard members' savings, the government plans to introduce a Deposit Guarantee Fund to protect deposits in SACCOs that become bankrupt or financially insolvent due to mismanagement.
Additionally, a stabilization fund has been activated to strengthen the financial independence and governance of local co-operatives while giving financial autonomy to the Cooperative Association of Kenya. With smaller SACCOs struggling to afford modern technological systems, the Ministry is harmonizing new regulations to create a centralized technology platform for 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. He emphasized that some SACCOs have failed to file audited accounts and have ignored Ministry directives, necessitating action.