Kenya SACCO Registration Rules: KSh1.2M Capital Limit Guide!

Kenya has resumed SACCO registration after a suspension, where the country’s government had stopped registering new SACCOs pending the review of the regulatory environment.

Kenya SACCO registration, The announcement has been made by the Commissioner for Co-operative Development, Mr David Obonyo, as he prepares for this year’s International Co-operative Day, otherwise called Ushirika Day.

This means that the government will now license SACCOs under stricter conditions intended to improve governance and protect members’ savings.

Reasons for Suspension of SACCO Registration in Kenya

Registration of SACCOs in Kenya was suspended last year in May due to several problems that were being experienced in some SACCOs, like Kuscco, Metropolitan SACCO, and Ushuru SACCO.

Mr Obonyo explained that a technical committee had been put together to study the SACCO laws and operational requirements before registration could be allowed again.

New Capital Requirement of KSh 1.2 Million

As per the new regulations, those SACCOs seeking to register will need to have KSh1.2 million worth of operational capital prior to getting the approval.

According to authorities, the new regulation is aimed at making sure SACCOs are able to finance their operational costs without having to use the money from member deposits.

Obonyo stated that the move would help enhance the financial stability of the SACCOs sector and make it more stable for the savers.

Physical Operational Structures Mandatory

The government has also made the construction of physical structures mandatory for the newly formed SACCOs.

The applicants will be required to prove that they have:

Physical office
Operational staff
Sound administrative system

It is believed that these steps would help increase accountability in the cooperative sector.

Other Financial Requirements for Newly Registered SACCOs

There are also other financial requirements for newly formed SACCOs.

At least KSh10 million mobilised within the first year of operation

According to officials, this measure is aimed at ensuring only viable institutions operate in the sector.

The Commissioner stated that despite the fact that there were 14,000 registered SACCOs in Kenya, only around 4,000 regularly submitted their annual reports.

Delegate System for Larger SACCOs AGMs

In addition, the government further justified its proposal to have larger SACCOs with over 5,000 members use a delegate system during annual general meetings.

According to the government, very large meetings tend to hinder effective participation and decision-making.

In the proposed system, members will engage in deliberations locally before sending their delegates to participate in national meetings.

Cooperative Sector Remains Crucial in Kenya’s Economy

Daniel Marube, the CEO of Cooperative Alliance of Kenya, said that the cooperative movement still plays a vital role in the economy of Kenya.

He said that about 20 million Kenyans are members of at least one cooperative society or SACCO.

Further, Marube noted that cooperatives continue contributing towards:

Affordable financial services
Housing initiatives
Small business support
Agricultural marketing

Finally, he urged increased involvement of youths through technology-based and employee cooperatives.

Conclusion

The decision by Kenya to resume SACCO registration is accompanied by many more stringent conditions intended to improve governance, sustainability, and public confidence within the cooperative sector.

Even though this may lead to a few applications, the government believes that the changes will lead to the formation of better and more reliable SACCOs in the country.