Cooperative clean-up: Oparanya targets non-compliant societies in major sector reforms

All cooperative societies—including unions, national cooperative organisations, and apex cooperatives—that have failed to submit their annual returns for the past three years will be deregistered and lose their status as corporate entities, Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya has announced.

Speaking during the Cooperative Leadership Forum organised by the Cooperative Alliance of Kenya and the Institute of Directors of Kenya, Oparanya said the move follows increasing non-compliance with statutory filing requirements under the Cooperative Societies Act.

“Let me be clear: any cooperative society that has failed to file its returns for the last three years and within the stipulated timelines will be struck off from the Cooperative Register and will cease to exist as a corporate entity. This directive takes immediate effect, and all cooperative entities are expected to comply fully,” he said.

He directed that all cooperative societies, including unions, national cooperative organisations, and apex cooperatives, must file their annual returns no later than the 30th of April each year.

“In response to this concern, and in exercise of the powers granted to me under Section 93A(d) of the Cooperative Societies Act and Rule 14 of the Cooperative Societies Rules, I hereby direct all cooperative societies, including unions, national cooperative organisations, and apex cooperatives, to file their annual returns no later than the 30th of April each year,” Oparanya said.

Audited financial statements

He noted that the returns must include a duly approved copy of the audited financial statements for the year in question, as well as updated details of all elected officials and the Chief Executive Officer.

“These returns must include a duly approved copy of the audited financial statements for the year in question, as well as updated details of all elected officials and the chief executive officer—specifically their full names, physical addresses, telephone numbers, and email addresses,” he added.

Oparanya, who was accompanied by Principal Secretary Patrick Kilemi and Commissioner of Cooperatives David Obonyo, also directed that societies with over 10,000 members must amend their by-laws within the next six months to adopt a delegate system of representation at general meetings.

“In practice, for societies with more than 10,000 members, especially those with broad geographic coverage, it is neither practical nor efficient to hold general meetings with every member physically present. This has often led to disorganised meetings and poor decision-making processes,” Oparanya said.

Delegate system

The CS said the proposed delegate system should limit the number of delegates to 500, selected fairly and inclusively, reflecting geographical distribution, gender balance, age diversity, and inclusion of persons with disabilities.

“These directives are not mere administrative measures, they are essential steps towards building a cooperative movement that is transparent, participatory, and resilient. I urge all cooperative leaders and members to take these directives seriously and implement them without delay,” Oparanya said.

He said the government is taking steps to rebuild trust in the cooperative sector, noting that the industry is under strain due to financial mismanagement, weak governance frameworks and eroding public confidence.

“These are not theoretical concerns. They are real and visible in the form of shuttered saccos, disillusioned members, and communities that are increasingly questioning the relevance and reliability of cooperative institutions,” he said.

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He emphasised that Kenya’s over 31,000 registered cooperatives, mainly saccos, remain central to the government’s Bottom-up Economic Transformation Agenda (BETA) through financial inclusion, grassroots empowerment, and poverty reduction.

“Kenya’s cooperative movement has, for over a century, served as a formidable engine for economic empowerment and social transformation. It has enabled millions of farmers, traders, and entrepreneurs to access opportunities and assert their dignity through enterprise,” the CS said.

Cooperative entrepreneurship

Oparanya reiterated that his ministry is committed to creating a supportive environment for cooperative entrepreneurship through better infrastructure, enhanced access to finance, and robust regulatory frameworks.

He cited the Cooperative Societies Bill, 2024, currently before Parliament, as a key part of the reform agenda.

The Bill introduces stronger ethical leadership requirements, transparency, accountability, and anti-corruption safeguards. It also sets minimum education and competency thresholds for cooperative leaders.

“The Bill strengthens good governance with robust oversight and safeguards institutional integrity through strict penalties and self-regulation frameworks, all designed to restore trust and ensure the sustainability of Kenya’s cooperatives sector,” he said.

He added that the ministry is advancing a comprehensive strategy to strengthen the cooperative sector through governance reforms, legal realignments, and institutional restructuring.

As part of these efforts, a five-member committee of experts was appointed in May to review the Sacco Societies Act, 2008. The review is intended to align the legislation with emerging global standards while enhancing institutional accountability and strengthening regulatory frameworks.

At the same time, the ministry has inaugurated a two-year transition board for the Kenya Union of Savings and Credit Cooperatives (KUSCCO). The board has been tasked with leading the organisation’s restructuring process, safeguarding the interests of members, and repositioning KUSCCO as a credible apex body in cooperative governance.

Producer cooperative governance

The government is also placing renewed focus on producer cooperative governance, particularly within the agricultural sector. Key among the priorities is the revival and professionalisation of coffee cooperatives to promote transparency, restore sound governance, and empower farmers through accountable, member-led institutions.

Oparanya clarified that the reforms are corrective, not punitive.

“They are designed to rebuild trust and position our cooperatives for sustainable growth. We intend to implement them in full consultation and partnership with all sector stakeholders,” he said.

He announced that the ministry is working to facilitate responsible debt management and affordable lending through saccos, backed by the establishment of a Deposit Guarantee Fund. This fund, part of the Sacco Societies Act amendments, is meant to protect members’ savings and enhance financial sector stability.

He further noted that the government is also exploring partnerships with fintech firms to introduce advanced risk management solutions tailored to cooperative needs.

“Effective risk management is crucial for the continued success of cooperatives,” Oparanya said.

He urged cooperative boards and management to undergo continuous training to meet the complex legal, financial, and ethical challenges of modern cooperative leadership.

He also challenged leaders to assess governance structures in their institutions and take corrective action where necessary.

“We must choose integrity over indulgence. We must choose service over personal status. We must choose to build a future of trust, resilience, and shared prosperity for all Kenyans through vibrant cooperatives and empowered MSMEs,” Oparanya said.