Kenya Cooperatives Bill 2024 Senate: Final Concurrence Nears for Key Reforms

• The Draft Cooperatives Bill 2024 Kenya has passed the National Assembly and undergone Senate readings, now awaiting National Assembly concurrence on Senate amendments.
• The Bill proposes establishing a Kenya SACCO Deposit Guarantee Fund to compensate members if a SACCO liquidates.
• It also aims to create a framework for inter-SACCO lending, addressing the current exclusion of financial cooperatives from the National Payments System.
• The legislation seeks to close regulatory gaps that allowed past losses, such as those at KUSCCO, by introducing a stronger KUSCCO regulatory framework.
• A sessional paper to repeal the outdated Cooperatives Act, Cap 490, is also awaiting parliamentary debate and approval.

The new Cooperatives Bill is specifically crafted to rectify existing legal challenges and regulatory gaps that have historically contributed to financial losses within the sector.

The Kenyan cooperative sector is keenly observing the progress of the Draft Cooperatives Bill 2024, which currently awaits final parliamentary concurrence before reaching President Dr. William Samoei Ruto for assent. The legislative journey for this significant piece of inter-SACCO lending legislation Kenya has seen the National Assembly pass the Bill with amendments on December 3rd, 2024.

Subsequently, the Kenya Cooperatives Bill 2024 Senate process involved its first, second, and final readings on November 12th, 2025. Following these readings, the Senate passed the Bill with its own set of amendments. It then referred the document back to the National Assembly for further consideration on February 12th, 2025. For the Bill to become law, the National Assembly must now concur with the amendments introduced by the Senate, after which it can be presented to the President.

However, the path to enactment has not been without obstacles. The substantial financial resources within the cooperative industry have reportedly attracted significant vested interests, which appear intent on either controlling or delaying the legislative process. Despite these challenges, industry stakeholders, including Mentor SACCO Chief Executive Officer Joyce Waceke, acknowledge widespread goodwill within the cooperative sector for essential legal and regulatory reforms. Waceke has also highlighted concerns about the proliferation of unresearched information being disseminated and stressed the critical need for comprehensive public participation, industry understanding, harmony, and thorough consultations to ensure the Bill's successful implementation.

A central tenet of the proposed Draft Cooperatives Bill 2024 Kenya is the establishment of a Kenya SACCO Deposit Guarantee Fund. This fund is designed to offer crucial protection to members by providing compensation in the unfortunate event that a financially distressed SACCO becomes insolvent and undergoes liquidation. This measure aims to bolster confidence in the cooperative financial system and safeguard members' savings.

Beyond deposit protection, the Bill also seeks to address long-standing issues surrounding inter-SACCO lending. Currently, financial cooperatives are excluded from the National Payments System, and a formal inter-SACCO lending facility remains absent, partly due to past challenges experienced by the Kenya Union of Savings and Credit Cooperatives (KUSCCO). Isedorius Agolla, Chairman of the Kenya Association of Front Office Service Activity (KAFOSA) for the Coast Region, has emphasized that inter-SACCO lending is a long-overdue necessity. He anticipates that once robust structures are established and a central pool is identified, SACCOs will gain access to credit facilities offering lower interest rates than traditional banks, thereby enhancing their profitability and operational efficiency.

The new Cooperatives Bill is specifically crafted to rectify existing legal challenges and regulatory gaps that have historically contributed to financial losses within the sector. A notable example cited is the case of KUSCCO, where significant losses reportedly occurred over an extended period without adequate detection or intervention. This highlights the urgent need for a more robust KUSCCO regulatory framework to oversee the operations of Secondary Cooperative Societies.

As 2026 draws to a close, the absence of a functional inter-SACCO lending facility continues to pose a significant challenge for financial cooperatives. The proposed legislation aims to fill this void, providing a structured mechanism for lending between SACCOs. This is crucial for fostering liquidity and financial stability across the cooperative movement. The Bill's provisions are expected to create a more transparent and accountable environment, preventing future occurrences of unchecked financial deterioration within key cooperative institutions.

The broader context for the Kenya Cooperatives Bill 2024 Senate discussions includes the ongoing efforts to repeal the outdated Cooperatives Act, Cap 490. A sessional paper initiating this repeal has already been published, signifying the government's commitment to modernizing the legal framework governing cooperatives. However, this document is currently stalled in parliament, awaiting debate and approval.

The comprehensive reforms envisioned by the new Bill, including the establishment of a Deposit Guarantee Fund and formalized inter-SACCO lending legislation Kenya, are critical for the sector's future. These changes are intended to provide a more stable, secure, and efficient operating environment for SACCOs, ultimately benefiting their members and contributing to the broader financial landscape of Kenya. The successful enactment of this Bill is seen as pivotal for ushering in a new era of growth and stability for the cooperative movement.

Lawyers advising SACCOs or financial institutions in Kenya should closely monitor the progress of the Cooperatives Bill 2024, as its enactment will introduce a Deposit Guarantee Fund and new frameworks for inter-SACCO lending, requiring significant compliance adjustments and potential restructuring for clients.

Source: Original reporting via Capital FM