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The Savings and Credit Cooperative societies, represented by the acronym SACCOs, are one of the most important and often visible typology of cooperatives in Kenya. Their distinguishing and unique character trait from other types of cooperatives is the object and purpose for which they are incorporated, which is to transact the business of mobilization of savings, and advancement of credit facilities to their members. The provision of savings and credit facilities is part and parcel of financial services sector and consequently, SACCOs are also often referred to as financial cooperatives, and are clustered as such together with other financial intermediating cooperatives like investments and housing cooperatives.

Unlike other jurisdictions, the Kenyan SACCO subsector is legally and by way of practice divided in to two segments; principally defined or differentiated by the nature of savings and deposits they mobilize from their membership.

The first segment is the deposit-taking SACCOs (DT-SACCOs), and the second segment are the non-deposit-taking SACCOs (non-DT-SACCOs). The DT-SACCOs are those that take demand deposits, and thus offer withdraw-able savings accounts services similar to those offered by banking institutions. They are the equivalent of Credit Unions in jurisdictions such as USA, Canada, UK, Australia and the Latin Americas; or the Cooperative Banks in South Africa, India, and parts of continental Europe.

On the other hand, the non-DT-SACCO segment are those that mobilize savings (deposits) from their members; which deposits are strictly utilized as collateral for credit facilities advanced to such members. These deposits are not withdraw-able by the member, but can only be refunded (less any liabilities owed by the member) upon the member’s withdrawal from the membership of the SACCO. It is important to note that the distinction of deposit-taking and non-deposit taking SACCOs is a unique phenomenon to the Kenyan Credit Union movement. This is probably so given the evolutionary and development stages that SACCOs in Kenya have been going through. In the global arena of Financial Cooperative or Credit Union systems however; all Credit Unions are deemed to be deposit-taking Financial Institutions, and are licensed and regulated as such.

Legal and Regulatory Framework for DT-SACCO Societies

There are two major statutes which govern the regulation and supervision in Kenya namely the CSA and the SSA. The CSA which has been in force since the early independence days, albeit through various amendments, principally deals with the registration, incorporation and general supervision of all cooperatives societies, including DT-SACCOs and is administered by the office of the Commissioner for Cooperative Development.

However, the CSA does not provide for a framework for the prudential supervision of deposit-taking Sacco Societies (DT-SACCOs). The legal framework for the supervision of DT-SACCOs is founded in the SSA, which provides the legal mechanisms for the prudential regulations of DTSs in Kenya in line with international best practices of financial regulation and supervision of deposit-taking financial institutions. The SSA is administered by the Sacco Societies Regulatory Authority.

The DT-SACCOs sector has a dual supervisory framework. On the one hand is the CSA which is applicable to all cooperative societies; and on the other hand is the SSA which applies to the prudential aspects of supervision and regulation of DT-SACCOs. Even though it was anticipated that the SSA would also apply to certain “specified” non-deposit taking SACCOs (non- DT-SACCOs) by virtue of Section 3(2) thereof; the regulations to specify such non- DT-SACCOs to which it would apply have not been developed. Consequently, the current application of the SSA remains limited to DT-SACCOs only.



The co-operative sector in Kenya is clustered in three key models namely their structural organization; their general business purposes; and their legal and regulatory frameworks. These models lead in to the micro-typology of co-operative enterprises that operate in the country.

The clustering of the various types of co-operative Societies is important as it eases and simplifies the identification of challenges affecting each cluster; with a view to informing the appropriate policy interventions, since each of the clusters has similarities in the unique identifying factor.

Structural organization clustering

The structural clustering is premised on the principle of cooperation among cooperative enterprises and is founded on the vertical organization of the cooperative enterprises, namely the primary; the secondary; the Tertiary and the Apex Cooperative enterprises. This structural clustering is embedded under the Co-operative Societies Act, and each cluster is uniquely defined on the basis of qualification for membership and service provision to such membership. Table 1 shows provide a summary of the structural clustering of Cooperatives in Kenya.


Table 1: Structural Clustering of Cooperatives





Primary co-operative enterprises

The membership is restricted to individual persons, and they serve individual members. They are defined in Section 2 and 5 of the CSA.

DT-SACCOs are principally primary cooperatives Societies because their memberships are mostly limited to private individual persons.


Secondary co-operative enterprises

The membership is restricted to two or more primary co-operatives, and serves those primary co-operatives.

They are also called cooperative unions, and defined in Section 2 and 5 of the CSA. There are several secondary cooperative enterprises in Kenya.


Tertiary co-operative enterprises

The membership comprises both primary and secondary co-operatives, and not individuals. They serve those members, and not individuals.


Apex co-operative society

Is the national co-operative society formed at the national level by the cooperative movement in Kenya, to promote cooperative development and represents the interests of cooperative societies locally and internationally.

The Apex society is defined and recognized in Section 2 as read with Section 5 and 6 of the CSA. It is generally assumed that there can be only one Apex cooperative organization in the country.


Legal and Regulatory Framework clustering

This clustering is principally informed by the applicable legal framework that governs the supervision of the co-operative enterprises. There are two legal and regulatory framework governing cooperative enterprises in Kenya, namely the CSA and the SSA. Apart from DT-SACCOs, and the specified non-DT-SACCOs which are subject to the SSA; all other cooperatives societies are subject to the regime of the CSA. It is however important to note that the regulations governing the specified non-DT-SACCOs under Section 3(2)(b) of the SSA are yet to be promulgated.

The key difference between the two legal regimes is that the SSA is a specialized legislation dealing mainly with prudential regulation, and thus applies principally to deposit-taking SACCOs whose activities are required to be prudentially regulated. The CSA on the other hand remains a general registration, constitutive and supervisory statute applicable to governance and general operations of all cooperative enterprises.

Financial intermediation objective (business purpose) clustering

Co-operative enterprises are generally incorporated for specific purposes and objectives. Financial intermediation involves situations in which financial institutions stand between counterparties in a transaction, in this case the co-operative enterprise acts as the financial institution in the intermediation, in a near similar way that a banking institution would.

The various types of co-operatives enterprises can be clustered into two major categories namely financial co-operatives and non-financial co-operatives, determined by their involvement in financial intermediation. Table 2 shows the descriptive features that distinguishes the two sets of clusters.

Table 2: Financial intermediation clustering of Cooperatives




Financial Co-operatives


These are the cooperatives which are registered with the objectives of financial intermediation on behalf of their members in one way or the other.


The membership may be individuals; or primary, secondary or tertiary co-operative societies.



Land/Housing Co-operatives;

Investment Co-operative.




These are cooperatives which are registered with the key objectives of furthering the socio-economic interest of their members, without the co-operative intermediating financial services between the counterparties as a financial institution.


The membership may be individuals; or primary, secondary or tertiary co-operative societies.



Production Co-operatives;

Marketing Co-operatives;

Consumer Co-operatives;

Transport Co-operatives,

Multipurpose Co-operatives;

Special interest groups Co-operatives.



 For more details download a copy of the Sacco Supervision report via this link


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