NAIROBI, Kenya, Jul 4 – The Ministry of Cooperative Development is set to come up with a new Sacco law that seeks to regulate the sector and offer good governance.
Speaking during this year’s Ushirika Day Celebrations, Cooperatives Minister Joseph Nyaga said that with increased competition from other financial institutions, the new law would go a long way in creating sound governance structures.
“We have faced major challenges over the years because of lack of proper structure. This new law will therefore enable us strengthen the Sacco movement and take us forward.”
Mr Nyaga said once that Saccos become manageable it would make the sector stand toe-to-toe with other financial institutions.
“This will help the Sacco movement in meeting 21st century challenges as they face competition from banks and other financial institutions especially in the rural areas.”
The Treasury recently allowed banks to appoint agencies around the country that would serve their interests.
Mr Nyaga cautioned those in the Sacco movement to tread carefully when choosing banks to partner with.
He said commercial banks would have to seek permission from the Sacco Regulation Authority, which would analyse their ability to serve as agents for any bank.
“If this doesn’t happen, it has a potential of bringing a financial crisis because Saccos are special instruments that reach the people and if we are not careful it could lead to chaos.”
The law, which is already in place, is awaiting gazettement and is set to be operational by September.
At the same time, the minister announced that a task force charged with investigating the collapse of pyramids in the country had completed its task and had already presented a report to his ministry.
He was particularly perturbed because many Sacco members had borrowed heavily from their co-operative movements to finance their investment plans.
Mr Nyaga urged Kenyans at large to desist from engaging with institutions they were not familiar with.
“Please don’t spend or invest your hard earned cash in shaky institutions. They will very often exploit loopholes in the laws to make away with your money.”
The Minister said he was studying the report and would be releasing the findings to the public in the next few weeks.