The Ministry of Co-operatives is pushing for the merger of smaller Saccos to strengthen supervision of the thousands of co-operatives nationwide that operate with limited capital and deposits.
Co-operatives Cabinet Secretary Wycliffe Oparanya said many small Back Office Service Activity (Bosa)-only Saccos are struggling or inactive because they serve few members and have “limited impact” on financial inclusion.
In these Saccos, members’ funds are used to buy shares and provide loans. While share capital cannot be withdrawn, it can be transferred to another member when exiting.
“A time has come for the Sacco sector to explore market-driven solutions of consolidations and mergers of these very many small Bosa-only Saccos. This is the only way to ensure their financial viability and stability,” said Oparanya during the launch of the Sacco Supervision Annual Report 2024.
He urged co-operatives with similar economic and social ties to start discussions on mergers as a survival strategy.
The report revealed that of the 177 deposit-taking and 178 non-withdrawable deposit-taking Saccos under the Sacco Societies Regulatory Authority (Sasra), just 40 held 65.83 percent of the Sh749.43 billion deposits.
Oparanya noted that the sector can learn from a recent merger in Kirinyaga County, where a small Sacco joined a larger one, giving members access to a wider range of financial services.
Mergers will also make oversight easier as the government aims to bring all co-operatives under Sasra’s supervision. At present, Sasra regulates all deposit-taking and non-withdrawable deposit-taking Saccos with deposits of at least Sh100 million, leaving many smaller co-operatives under the Commissioner of Co-operatives, where supervision is weaker.
“Governance in Saccos is still a matter of grave concern for the government,” Oparanya added, emphasizing the urgency of reforms in the sector.