Is This the End of SACCOs? Government Plans to Tap Sh1 Trillion in Savings for Infrastructure

The government intends to channel more than Sh1 trillion held by Savings and Credit Cooperative Societies (SACCOs) into the National Infrastructure Fund. The plan forms part of efforts to finance large-scale development projects without relying solely on external borrowing.

The move will be supported by the new Cooperatives Bill. Officials say the legislation will create a framework for SACCOs to invest in government-backed infrastructure initiatives.

SACCOs have long served as a trusted savings vehicle for millions of Kenyans. Members use them to build capital for personal and business needs through affordable loans and dividends.

SACCOs typically make their money by lending members’ savings back to other members at interest. This model allows them to offer lower rates than commercial banks while generating returns that benefit all members through dividends.

Public reaction to the proposal has been largely negative. Many commenters warned that the plan could reduce liquidity and make it harder for members to access their money when needed.

If large portions of SACCO funds are locked into long-term infrastructure projects or government bonds, the institutions may have less money available for everyday lending. This could force them to raise interest rates on member loans or limit new borrowing.

Bonds and infrastructure investments are often illiquid and take years to mature. Unlike short-term member loans that keep money circulating within the SACCO, these assets could tie up capital for extended periods.

The proposal comes alongside other sources of funds for the National Infrastructure Fund. Proceeds from the recent sale of a 15 percent stake in Safaricom to Vodafone Kenya are also being directed toward the fund to support commercially viable public infrastructure projects.

Critics argue that the government should focus on better management of existing resources rather than accessing private savings. Some said they would consider withdrawing their money or moving it to other investment options.

The National Infrastructure Fund is meant to support projects in roads, housing, energy and other sectors. Proponents argue that domestic capital can reduce dependence on foreign loans with high interest costs.

The Cooperatives Bill is expected to set governance and investment guidelines. It aims to ensure that any participation by SACCOs meets regulatory standards and protects member deposits.

Many Kenyans continue to rely on SACCOs for emergency loans and long-term savings. Any shift in how these funds are deployed could affect access to credit for ordinary citizens and small businesses.

The proposal comes at a time when the government is seeking alternative financing sources. Officials have emphasised the need to complete ongoing projects and start new ones that create jobs and improve services.

Further details on how the funds would be deployed and what safeguards will apply are expected once the legislation is finalised. SACCO leaders and members are likely to engage in further consultations.