After months of turbulence in the cooperative movement in Kenya, the government is now stepping up controls to eliminate financial fiddling and corruption through falsified membership and other data.

Against the backdrop of recent financial and management scandals in the sector, Cooperatives and MSME Development Cabinet Secretary Wycliffe Oparanya now acknowledges the cooperative movement faces significant threats arising from financial mismanagement, weak governance frameworks and a growing erosion of public trust, which are very visible in the form of shuttered Saccos, disillusioned members and communities that are increasingly questioning the relevance and reliability of cooperative institutions.

Through enhanced sectoral integrity, the cabinet secretary said the government, through his ministry, initiated targeted governance reforms to restore public confidence, improve operational efficiency, and reinforce ethical leadership within the cooperative sector.

“We are proactively driving sector-wide reforms through the proposed Cooperatives Bill, 2024, currently before the Senate. This enhances ethical leadership by enforcing transparency, accountability and anti-corruption measures. It 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,” the cabinet secretary said.

Oparanya has subsequently directed all cooperative societies, unions, national cooperative organisations and apex cooperatives to file their annual returns by the end of this month, failing which they risked being deregistered.

Oparanya, who spoke Thursday during an Ethical, Leadership and Governance forum for Cooperative leaders organised by the Cooperative Alliance of Kenya (CAK) in Naivasha, noted that as stipulated under the Cooperative Societies Act, all cooperatives were required to file their annual returns in the prescribed manner and within the specified time frame of the end of April 30 each year.

“Unfortunately, we have observed a growing number of societies failing to meet this legal obligation, thereby exposing themselves to the risk of deregistration,” Oparanya said.

“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 cooperatives 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 warned.

The cabinet secretary 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, specifically their full names, physical addresses, telephone numbers and email addresses.

Oparanya has further directed that all cooperative societies with membership exceeding 10,000 to amend their by-laws within the next nine months to adopt a delegate system of representation.

Under this system, he added, no more than 500 delegates shall be selected to represent the broader membership at general meetings but emphasised the representation must be fair and inclusive, taking into account geographical distribution, gender balance, age diversity, and the inclusion of persons with disabilities.

“In practice, in 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,” he noted.

The cabinet secretary said the two critical directives given were aimed at ensuring compliance and enhancing institutional efficiency among cooperative societies and was part of the ongoing efforts to strengthen governance, transparency, and accountability within the cooperative sector.

He explained that the Cooperative Societies Bill, 2024, also introduces provisions that required cooperative leaders to meet higher educational and competency standards, saying this would ensure that cooperatives are guided by individuals with the right expertise to make informed, strategic decisions for long-term success.

The cabinet secretary appealed to cooperative society leaders, who are entrusted with the stewardship of public resources, to be careful, saying their actions today will determine whether future generations will inherit stronger institutions or broken systems.

“Strong governance is the foundation of institutional resilience and public trust. I call on all cooperative leaders to embrace internationally recognised practices such as member-led oversight, mandatory independent audits, and transparent reporting. Boards and management must commit to ongoing training to effectively manage the legal, financial, and ethical challenges of modern cooperative leadership,” he said.

Equally important, Oparanya noted, is making inclusivity a standard, ensuring full participation of women, youth and marginalized groups in all decision-making processes to drive equitable and sustainable growth.

CAK Chairman McCloud Malonza noted that cooperatives have grown in this country, and with 35 per cent of the GDP coming from cooperative savings, there was a need for governance to be stable and sound.

“One of the aspects we are dealing with today in this forum is to ensure that our leaders are empowered in terms of looking at the big institutions that have grown from small institutions to bigger institutions so that they continue growing, and this requires good stewards who understand the cooperative model,” Malonza said.

He confirmed that the movement, together with the government, is fast-tracking capacity building of leaders to equip them with the necessary skills to undertake the current business certainties.

“Why we are doing this is to help our institutions endure the present competition, especially being mounted by the big boys in the money market. Largely, we are emphasising ethics and sound governance and product development,” said Malonza.

Going forward, he said, the mission is to strengthen the institutions to enjoy a piece of the huge government businesses, like infrastructure development and supply of other services and goods.

CIC Insurance Group Chairman Nelson Kuria said the summit of cooperative leaders has come at a very critical time in the history of the cooperative movement and Kenya in particular, when the world is celebrating the United Nations International Year of Cooperatives in 2025.

Kuria challenged the current generation of leaders to look at where they would take the movement in terms of the next level, in terms of excellence, and in terms of sustainability so that they could withstand the challenges of competition from public and private corporations because the competition is increasing by the day.

 Kenya’s has over 31,000 cooperatives, mainly Saccos, which play a key role in financial inclusion by offering accessible services to many excluded from formal finance.

They are central to the government’s BETA plan, empowering grassroots communities to create wealth and jobs and reduce poverty, ensuring development benefits reach underserved areas, and promoting equitable livelihoods nationwide.

• A Tell Media / KNA report / By Wangari Ndirangu