Co-operatives Bill targets Governance reforms and stronger SACCO oversight

Kenya is a step away from enacting a sweeping new law that will reshape the co-operative sector, introduce term limits for long-serving officials, strengthen oversight of SACCOs, and provide stronger safeguards for members' savings.

Principal Secretary for Cooperatives Patrick Kilemi said the proposed Co-operatives Bill, 2024, has reached its final parliamentary stage and is awaiting mediation between the National Assembly and the Senate before it can be forwarded to President William Ruto for assent.

Speaking during a Radio Generation interview on Thursday, Kilemi said the mediation process is the final hurdle before the Bill becomes law.

“It is in the very last steps. It is going through what is called mediation. We expect the Speaker to do the proclamation in Parliament so that the process can start officially for mediation, which is a 30-day period for members of the National Assembly and members of the Senate to agree on the law. That is the very last bit before presidential assent,” he stated.

The Co-operatives Bill, 2024, seeks to replace the current Co-operative Societies Act and align the sector with the Constitution of Kenya 2010 and the devolved system of government.

The reform process began with a review of the National Cooperative Policy in 2017 before the Bill was introduced in Parliament in February 2024. It proposes wide-ranging changes aimed at improving governance, strengthening SACCO supervision, clarifying the responsibilities of national and county governments, enhancing financial controls, and protecting members' savings.

The Bill was first tabled in the National Assembly as the Cooperatives Bill (National Assembly Bill No. 7 of 2024) and was sponsored by National Assembly Majority Leader Kimani Ichung’wah.

Members of the National Assembly passed the legislation on December 3, 2024, before forwarding it to the Senate for consideration.

The Senate later approved the Bill on February 12, 2025, with amendments and returned it to the National Assembly, setting the stage for mediation between the two Houses to resolve outstanding differences before it can proceed for assent.

According to Kilemi, the proposed law is intended to modernise a sector that has played a major role in Kenya’s economic development for more than a century.

He traced the origins of the co-operative movement to 1908 when the first dairy co-operative was established in Limuru by colonial administrators. The organisation later evolved into New KCC and helped lay the foundation for the country's dairy industry.

Kilemi said co-operatives became a key pillar of Kenya’s economic growth after independence, supporting sectors such as coffee, tea, dairy, cotton and pyrethrum while creating opportunities for economic participation and industrial growth.

Despite the sector's contribution, he said the legal framework governing co-operatives has not kept pace with constitutional and economic changes.

“We never upgraded our co-operative law to align with the new Constitution. One of the reasons we want to change our law is to align it to the 2010 Constitution, to breathe in the concept and reality of devolution, but also to address the question of good governance,” he highlighted.

One of the major proposals in the Bill is the introduction of term limits for co-operative leaders, a move aimed at promoting leadership renewal and strengthening democratic governance within co-operatives.

“There are co-operative leaders who have been chairmen when Kenyatta was president, when Moi was president and when Ruto is president, and they are still chairmen. We want to introduce some level of competitiveness in the democratic process and introduce term limits,” the PS stated.

The legislation also seeks to strengthen oversight of SACCOs following cases of financial difficulties linked to weak governance and borrowing decisions.

“We have taken huge steps. Even if you have borrowing powers approved by your members, when you actually want to borrow, you must seek approval from the Commissioner for Co-operatives,” he said.

Kilemi noted that related amendments to financial co-operative laws will also give greater powers to the SACCO regulator and establish a deposit protection system for members.

“In the law, we are now providing for an institution that will give deposit insurance so that if a SACCO goes down, members have a fallback,” he said.

He said the proposed reforms are designed to strengthen accountability, improve management of co-operatives and ensure members' savings remain protected while supporting the long-term growth of the sector.