A tightening grip is coming over Sacco leadership as authorities raise concern that some boards may be handling members’ savings in ways that include costly foreign travel and financial reports that do not reflect the true position of the institutions.
Cooperatives Principal Secretary Kiburi Kilemi said proposed legal and policy changes are already under consideration within the ministry and Parliament, aimed at strengthening oversight and improving accountability in Sacco management. He made the remarks during the Harambee Sacco Annual Delegates Meeting held in Nairobi.
He expressed concern that some Sacco boards are benefiting personally from members’ contributions, especially through repeated international trips that may not be necessary. “We want trips made by Sacco boards audited to assess their true importance,” he said. “There are societies taking advantage of members’ deposits to enrich themselves.”
PS Kilemi noted that a number of Saccos have formed working arrangements with travel firms that lead to frequent benchmarking trips abroad, which he said often fail to deliver meaningful value to members. He urged Sacco leaders to instead focus on learning from strong-performing institutions within the country, rather than relying on international travel.
He spoke alongside Commissioner for Cooperatives David Obonyo, who also raised concern about governance standards in parts of the sector. The officials warned that some Sacco boards may be presenting overstated financial results in order to support the payment of dividends that may not be sustainable in the long run.
Kilemi described such practices as a risk to the stability of the sector, noting that inaccurate financial reporting could weaken confidence among members and affect the long-term health of Saccos. He stressed the need for clear and honest financial disclosures across all institutions.
To address these concerns, the government has directed larger Saccos to engage well-established auditing firms with international operations to improve transparency and strengthen financial reporting. The aim is to ensure that accounts are properly verified and that members’ funds are safeguarded.
The planned measures will also focus on cases of over-borrowing, where some Saccos are said to take on high levels of debt in an attempt to meet member expectations. Authorities warn that such borrowing patterns could expose institutions to financial strain if not carefully managed.
Despite the concerns raised about governance challenges, Harambee Sacco reported strong financial results during the same meeting, showing continued growth even as the sector faces scrutiny.
Chairman Macloud Malonza said the Sacco’s asset base increased to Sh42.2 billion from Sh37 billion recorded in the previous year. He added that revenue rose by Sh1 billion to reach Sh7 billion, while membership expanded by 7,000 new members over the same period.
The Sacco will distribute Sh2.8 billion to members as dividends, representing a payout rate of 9.1 per cent, which is slightly higher than the 9 per cent issued in the previous financial year.
