Licensing of Saccos by Sasra

1. Introduction

The Sacco Societies Regulatory Authority (SASRA) is empowered to license, regulate and supervise deposit taking Sacco Societies under the Sacco Societies Act 2008 (the Act), and the Regulations issued there under. The Act requires all Sacco Societies carrying out deposit taking business to apply for licenses from SASRA (Section 23 of the Act and Regulations 4). Deposit taking Sacco societies in the context of the Act refers to the Sacco Societies operating Front Office Savings Activity (FOSA).

2. Who should apply for license?

With effect from 18th June 2010, the date of publication of the Sacco Societies (Deposit Taking Sacco Business) Regulations, 2010:

All Sacco Societies intending to operate FOSA shall apply for license from SASRA (section 23 of the Act and regulation 4(2)); and

All Sacco Societies already operating FOSAs are required to apply for license from SASRA by 17th June 2011.
3. What are the licensing Procedures?

The licensing procedures are detailed in Section 24 of the Act and Section 4 of the Regulations. These procedures are split into five main stages as explained below.

3.1 First stage: Application for License

Duly complete and submit the “APPLICATION FORM FOR A LICENCE” coded SASRA 1/001) in the regulations for SACCO Societies (Deposit Taking Business) to SASRA. This form is available here. The completed application form should be accompanied by supporting documentation including:

a) a certified copy of the Sacco society’s registration certificate, issued under the Co-operative Societies Act [Cap 490] Laws of Kenya.

b) a verified official notification of the Sacco society’s registered head office and branches, if any;.

c) a certified copy of the Sacco society’s bylaws.

d) a certified extract of minutes of the general meeting resolution authorizing the application for deposit taking license. This requirement applies to Sacco Societies seeking to commence FOSA operations.

e) name of the proposed chief executive officer.

f) Certified copies of the financial statements for the last three years

g) Evidence that the Sacco society has adequate capital by completing and submitting the Capital Adequacy Return (downloadable from as set out in Form 1 in the second schedule to the Sacco Societies (DT) Regulations, 2010. Refer to the guidance notes on capital adequacy for capital requirements at the point of making the application for license.

h) Business plan and Feasibility study available here

A Sacco Society must prepare and submit a comprehensive four year business plan in line with the transitional provisions (and feasibility study for a Sacco Society making the application to commence FOSA operations) detailing:

1. the vision and mission;
2. Scope and nature of business operations;
3. Economic and financial environment;
4. Organizational structure and management;
5. Financial and risks analysis;
6. Projected financial statements and analysis using the format provided in the regulations. The projections should show how the institution will meet the prudential standards within the plan period, namely:
Capital adequacy – indicate sources of capital over the plan period.
Loans quality and provisioning – Evaluate the loan portfolio, age the delinquency and make provisions as appropriate.
Liquidity – plans on liquidity management in full compliance with regulatory requirements.
Investment – divesting to comply with regulation 48 (limits on property, equipment and financial assets).
Sustaining the asset structure and quality

1. Control measures and monitoring procedures

The financial projections are based on the business plan and hence should assist in monitoring the strategic goals of the Sacco Society and therefore an implementation plan and monitoring framework should be included.

Note: Where the Sacco Society has a current business plan, the same should be reviewed in the light of the regulatory requirements and the four years transitional period.

h) Fit and Proper forms

Duly complete and submit the “Fit and Proper test” form (SASRA 01/002) with the application for license. The form should be completed by all persons proposed as directors and senior management as defined in the form. This form is available here.

3.2 Second Stage: Letter of Intent

SASRA will assess the application for fulfillment of the requirements in the first stage and if satisfied issue a Letter of Intent to the Sacco Society to put the following in place:

3.2.1 Institutional Infrastructure or business premises appropriate for deposit taking Sacco business. This includes but not limited to:

A banking hall;

A adequate working space;

Physical security measures; and

Strong room and safe.

3.2.2. Management Information System

The Sacco Society’s Information Management System must be capable of performing and accounting for all transactions and providing the minimum reports required by the Authority in an accurate and timely manner. The system should be operationally integrated and provide adequate security including data back up.

3.2.3 Risk Management policies and internal control systems

Sacco Societies face constant risks in the course of their business including credit, liquidity, interest rate, operational, reputation and regulatory risks. The Authority will require the Sacco Society to develop risk management policy framework addressing each of the risk identified. The risk management framework must address the following key considerations.

a. Clear definition of roles and responsibility of the Board and management in development, implementation and review of the risk management systems;

b. Adequate policies, procedures and limits;

c. Risk monitoring and information system;

d. Adequate internal controls and audit specific to each risk area.

3.3 Third stage: Onsite inspection

Upon completion of all the requirements specified in the Letter of Intent, the Sacco shall notify SASRA so that an independent on site inspection can be conducted to ascertain compliance. The inspection will be carried out within 30days from date of notification.

3.4 Fourth stage: Letter of Compliance

Upon completion of on-site inspection, if SASRA is satisfied that the Sacco Society has complied with all the conditions as stated in the letter of intent, it shall issue a compliance letter allowing the Sacco Society to pay the license fees within 30days.

3.5 Fifth stage: Issuance of a License

SASRA shall issue a license to the applicant Sacco Society upon payment of license fee of Ksh.50,000 (fifty thousand shillings) for head office and Ksh.20,000 (twenty thousand shillings) for each branch. The license shall be issued within 14days from the date of payment of the license fees.

4. What happens if a Sacco Society operating a FOSA at the commencement of the Regulations does not apply for license within the twelve months provided?

In line with Section 23(1), such a Sacco Society is in contravention of the law and the officers liable to the actions stipulated in section 23(2) of the Act among others.

5. Other matters

5.1 What happens after licensing of a Sacco Society?

a. The Authority shall within fourteen days from date of licensing publish in the Kenya gazette particulars of any newly licensed Sacco society.

b. At the beginning of each year and not later than 31st January, the Authority shall publish in at least one newspaper of national circulation particulars of licensed Sacco societies.

5.2 When is renewal of a license due?

A licensed Sacco Society will be required to apply for renewal of a license at least ninety (90) days before the expiry of its operating license in respect of its head office and any other place of business. The expiry date for all licenses will be 31st December.



Testing for Gossip

In ancient Greece, Socrates was reputed to hold knowledge in high esteem. One day an acquaintance met the great philosopher and said, “Do you know what I just heard about your friend?”



“Hold on a minute”, Socrates replied. “Before telling me anything I’d like you to pass a little test. It’s called the Triple Filter Test.”

“Triple filter?”

“That’s right”, Socrates continued. “Before you talk to me about my friend, it might be a good idea to take a moment and filter what you’re going to say. That’s why I call it the triple filter test. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?”

“No,”,the man said, “Actually I just heard about it and …”

“All right”, said Socrates. “So you don’t really know if it’s true or not. Now let’s try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?”

“No, on the contrary.”

“So”, Socrates continued, “you want to tell me something bad about him, but you’re not certain it’s true. You may still pass the test though, because there’s one filter left: the filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?”

“No, not really.”

“Well”, concluded Socrates, “if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?”

A Foot Has No Nose

Of the many interactions I had with my mother those many years ago, one stands out with clarity. I remember the occasion when mother sent me to the main road, about twenty yards away from the homestead, to invite a



passing group of seasonal work-seekers home for a meal. She instructed me to take a container along and collect dry cow dung for making a fire. I was then to prepare the meal for the group of work-seekers.

The thought of making an open fire outside at midday, cooking in a large three-legged pot in that intense heat, was sufficient to upset even an angel. I did not manage to conceal my feelings from my mother and, after serving the group, she called me to the veranda where she usually sat to attend to her sewing and knitting.

Looking straight into my eyes, she said “Tsholofelo, why did you sulk when I requested you to prepare a meal for those poor destitute people?” Despite my attempt to deny her allegation, and using the heat of the fire and the sun as an excuse for my alleged behaviour, mother, giving me a firm look, said “”Lonao ga lo na nko” – “A foot has no nose”. It means: you cannot detect what trouble may lie ahead of you.

Had I denied this group of people a meal, it may have happened that, in my travels some time in the future, I found myself at the mercy of those very individuals. As if that was not enough to shame me, mother continued: “Motho ke motho ka motho yo mongwe”. The literal meaning: “A person is a person because of another person”.

Source: “African Wisdom” by Ellen K. Kuzwayo

The frogs and the tower

There once was a bunch of tiny frogs

BE POSITIVE… who arranged a running competition. The goal was to reach the top of a very high tower. A big crowd had gathered around the tower to see the race and cheer on the contestants…

The race began…

Honestly, no-one in crowd really believed that the tiny frogs would reach the top of the tower. You heard statements such as:

“Oh, WAY too difficult!!”

“They will NEVER make it to the top”.

“Not a chance that they will succeed. The tower is too high!”

The tiny frogs began collapsing. One by one…

… Except for those who in a fresh tempo were climbing higher and higher…

The crowd continued to yell

“It is too difficult!!! No one will make it!”

More tiny frogs got tired and gave up…

…But ONE continued higher and higher and higher…

This one wouldn’t give up!

At the end, everyone else had given up climbing the tower. Except for the one tiny frog who, after a big effort, was the only one who reached the top!

THEN all of the other tiny frogs naturally wanted to know how this one frog managed to do it?

A contestant asked the tiny frog how the one who succeeded had found the strength to reach the goal?

It turned out…

That the winner was deaf.


How to become a member of a Sacco

All co-operatives in the country have By-Laws the defines the area of operation of the co-operatives and how to become a member of that society.

Save and Borrow

Save and Borrow


  1. You have to be within the area of operation of that society that you want to join. This means that you have to be in say Uasin Gishu County or to be more specific Eldoret East District. However the area of operation is defined in the By-Laws of the society. Some co-operatives have a whole country as their area of operation and some don’t so find out the area of operation of a society you want to join.
  2. You have have to be within the field of membership with a certain defined common bond. That is to say, you can be an employee of a certain company, a member of a certain church or own land or business within the society’s area of operation or doing business within the area of operation of the society you want to join.
  3. You must be 18 years and over
  4. You must be of good character and of sound mind
  5. You will also be required to pay an entrance fees and minimum share capital as required by the By-Laws of the society you want to join.
Saccos are a great way of saving and borrowing.

Saccos are a great way of saving and borrowing.

Once you become a member i.e. when you have been presented with membership application form and you being accepted by the society, you will be required to start your monthly contributions immediately which must be consecutive for you to qualify for any loan after usually six months.

Once you sign the membership application form and accepted by the society, you will now be bound by the By-Laws of the society and policies and resolutions of the general meetings of the society. You will be subjected to a fine not exceeding Ksh. 20,0000.00 for any volition of By-Laws.


Disputes in Co-operative Societies in Kenya

Co-operative Societies Act Section 76 defines Disputes as:
(1) If any dispute concerning the business of a co-operative society arises—
(a) among members, past members and persons claiming through members, past members and deceased members; or
(b) between members, past members or deceased members, and the society, its Committee or any officer of the society; or
(c) between the society and any other co-operative society, it shall be referred to the Tribunal.
(2) A dispute for the purpose of this section shall include—
(a) a claim by a co-operative society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or
(b) a claim by a member, past member or the nominee or personal representative of a deceased member for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not;
(c) a claim by a Sacco society against a refusal to grant or a revocation of licence or any other due, from the Authority.

Factors to be considered when borrowing a loan

1.       Business concept
It is the duty of member to put together details of the investment to be undertaken- the purpose of the loan i.e. the loan for increasing stock, purchase of machine, purchase of building materials, purchase of land, etc.
2.       Character of borrower
Assess your character- how do you behave when you have money and when you don’t?
-put in safety measures to ensure you use the loan for the purpose intended/wisely.
-why are you borrowing? Is it because you need the loan or is it because the money is available?
-are you a trustworthy applicant? Hardworking?
3.       Capacity to pay
This is the ability to repay credit if extended. Assess your own ability to repay the loan in line with society’s loan policy and your personal financial position.
Consider your capital standing or financial strength i.e. monthly financial obligations not on the palsy that may hinder you from repaying the loan or make you suffer pecuniary embarrassment.
4.       Own contribution
This is the amount of funds borrower is willing to invest in the business. Do not expect your society to finance your project 100%
5.       Collateral for loan
These are details on security put forward by the borrower in good faith as a guarantee that money borrowed will be repaid.
In co-operatives this is basically a guarantor. However, members should use other forms of security e.g. share certificates and insurance policy, in case the society loan policy allows.
6.       Interest rate
Consider the interest rate of the loan to be borrowed and its effect on your income for the whole period of the loan repayment.
Members should concentrate on development loans for their own development and take school fees loan where necessary.
They should avoid unnecessary emergency loans at all cost because mostly one cannot do much and they reduce member’s ability to take a development loan.
An applicant shall be considered or accepted for the processing upon a members meeting the following conditions:
1.       Must have been an active member of the society for a period f not less than six months
2.       Must be consistent saver with the society for a period of not less than six months
3.       Must be willing to conform to all rules, by laws and co-operative societies act
4.       Must be a Kenyan citizen with a valid identity card and be a person of sound mind who has not been declared bankrupt or barred to contract for any reasons
5.       Must be earning regular income either from business or employment
6.       The loan application must be for prudent purposes and application must justify its legality by stating its purpose

7.       Must be willing to make all necessary disclosures of information necessary to facilitate loan processing and guarantorship

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