Savings and Credit Cooperative Societies (Saccos) that have failed to file audited financial statements with the Ministry of Co-operatives for the past three years will be deregistered and barred from mobilising deposits, the government has announced.

Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya issued the directive last Thursday during an ethical leadership and governance forum in Naivasha, stating that the crackdown takes immediate effect. The move aims to restore transparency and accountability in a sector that holds over Sh1.3 trillion in member deposits.

“Any co-operative society that has failed to file its returns for the last three years and within the stipulated timelines will be struck off the Co-operative Register and cease to exist as a corporate entity,” said Mr Oparanya.

The directive follows widespread governance lapses, with several Saccos accused of mismanagement and failing to hold annual general meetings (AGMs), thereby locking out members from oversight. Some societies with large memberships have also been faulted for hosting disorganised AGMs. In response, Mr Oparanya has ordered all Saccos with over 10,000 members to amend their by-laws within six months to introduce delegate representation—ensuring inclusion across geography, gender, age, and persons with disabilities.

The Ministry also reminded Saccos of their legal obligation to file annual returns, including audited financials and up-to-date information on elected officials such as full names, physical addresses, contact numbers, and emails. Returns must be submitted by April 30 every year.

The directive comes amid heightened scrutiny following the Kuscco scandal, in which the Kenya Union of Savings and Credit Co-operatives lost Sh13 billion in a heist allegedly involving senior managers who have since been dismissed and taken to court.

Daniel Marube, Executive Director of the Co-operative Alliance of Kenya, welcomed the ministry’s directive, calling it a timely move to safeguard member interests and enhance sector growth beyond the current Sh1.8 trillion asset base held by over 28,000 co-operatives nationwide.

“The small things many Saccos ignore are what create financial leakages. We agreed to seal those leakages as soon as we recognise them,” said Mr Marube.

To support the reform agenda, the Ministry has appointed a committee of experts to oversee a comprehensive regulatory overhaul. Among its key mandates is the creation of a Sacco Deposit Guarantee Fund to protect member savings in the event of a collapse.

As part of the broader reform effort, the Ministry had already imposed a three-month moratorium on new Sacco registrations last month.