The government has announced plans to increase financial support for Savings and Credit Cooperative Organisations (SACCOs) by allocating more resources through the National Infrastructure Fund (NIF), a move expected to strengthen the cooperative sector and support ongoing reforms.
The announcement was made by Deputy President Kithure Kindiki during the Ushirika Day celebrations at Uhuru Park, where he outlined the government’s strategy to create additional fiscal space in the national budget while enhancing support for cooperatives.
Government to Create Fiscal Space Through NIF
Speaking during the event, Kindiki said the government intends to transfer eligible infrastructure projects from the national budget to the National Infrastructure Fund.
According to the Deputy President, this strategy will free up funds that can be redirected to other priority sectors, including the cooperative movement.
“We are going to create a bit of fiscal space in the budget by offloading some of the projects that can now be funded by the National Infrastructure Fund. Therefore, we will have a little more leeway to fund key sectors, including the cooperatives sector,” Kindiki said.
He revealed that the National Infrastructure Fund has already secured Ksh345 billion in seed capital generated from the sale of selected state agencies.
The government believes the new funding model will ease pressure on the Exchequer while ensuring key development projects continue without affecting financing for critical sectors such as SACCOs.
SACCO Reforms Set to Receive Financial Boost
The planned allocation comes as the government moves to implement sweeping reforms in the SACCO sector through the Sacco Societies (Amendment) Bill, 2025.
President William Ruto is expected to sign the Bill into law within the coming weeks after it completes the parliamentary process.
The legislation is designed to strengthen regulation of SACCOs, improve governance and restore public confidence in cooperative societies following concerns over financial management in some institutions.
Additional funding from the National Infrastructure Fund is expected to help implement several provisions contained in the proposed law.
Deposit Insurance Fund to Protect Members’ Savings
Among the major reforms contained in the Bill is the establishment of a Deposit Insurance Fund aimed at protecting members’ savings should a SACCO collapse.
Under the proposal, compensation will be calculated based on a member’s protected deposits after deducting outstanding loans, liabilities and any loan guarantee obligations.
The current proposal sets the maximum compensation at Ksh100,000 per member.
However, the proposed compensation limit has generated heated debate in Parliament.
Several lawmakers have argued that the amount is too low, particularly for members with substantial savings, saying many Kenyans could lose millions of shillings if a SACCO fails.
Members of Parliament have therefore pushed for the compensation cap to be reviewed upward before the Bill is enacted.
Digital Transformation for SACCOs
Beyond protecting members’ deposits, additional government funding could accelerate the digital transformation of SACCOs across the country.
The proposed law envisions shared technology infrastructure that would enable smaller SACCOs to access modern digital platforms without incurring high operational costs.
The shared systems are expected to:
- Improve regulatory compliance.
- Enhance financial reporting.
- Reduce operational expenses.
- Strengthen cybersecurity.
- Bridge technological gaps between large and small SACCOs.
The government believes the initiative will improve efficiency while making SACCO services more accessible to members.
NIF Faces Growing Scrutiny
Despite the government’s optimism, the National Infrastructure Fund has continued to attract criticism from various stakeholders.
One of the main concerns raised relates to its funding model, which relies partly on proceeds from the sale of profitable state-owned assets.
Critics argue that disposing of income-generating public assets could reduce future government revenues and limit long-term financial sustainability.
Civil society organisations and opposition leaders have also questioned the governance structure of the fund.
They have expressed concerns that inadequate oversight could expose the fund to misuse or allow it to finance politically motivated projects rather than nationally beneficial investments.
The government has, however, maintained that the fund will improve infrastructure financing while reducing dependence on borrowing and easing pressure on the national budget.
Cooperative Sector Expected to Benefit
If successfully implemented, the additional funding could significantly strengthen Kenya’s cooperative sector, which plays a vital role in mobilising savings, providing affordable credit and supporting millions of households.
The reforms are expected to improve financial stability, enhance transparency and increase confidence among SACCO members.
Government officials believe stronger regulation, better technology and deposit protection will make SACCOs more resilient while safeguarding members’ savings against future financial shocks.
As Parliament finalises the Sacco Societies (Amendment) Bill, 2025, attention will now shift to how much funding will ultimately be allocated to the cooperative sector and whether lawmakers will amend the proposed Ksh100,000 compensation limit before the legislation becomes law.