CS for Co operatives Wycliffe Oparanya and the Deputy President Prof Kithure Kindiki ….Photo/IP
NAIROBI, Kenya
A newly established infrastructure fund is set to open the gates for direct government support to the country’s struggling cooperative movement, officials announced.
The initiative aims to revitalize agricultural and financial cooperatives by modernizing processing plants, upgrading storage facilities and expanding digital networks.
Industry experts say the fund could transform the sector, provided there is political goodwill and strict financial oversight.
Speaking at the Ushirika Day celebrations at Uhuru Park, Deputy President Prof. Kithure Kindiki confirmed that offloading major development projects to the independent fund would relieve the national budget.
“I want to assure the cooperative movement that the government is committed to creating the fiscal space necessary to increase investment in this critical sector,” Kindiki stated, highlighting a shift aimed at boosting agricultural and credit unions.
Under the proposed Sacco Societies (Amendment) Bill, savings and credit cooperative societies (SACCOs) will be allowed to voluntarily invest in government-backed infrastructure bonds through the National Infrastructure Fund (NIF).
This mechanism seeks to leverage the sector’s 1.1 trillion shillings ($7.7 billion) in cumulative member savings to build public works like mega-dams, highways and energy grids without piling on foreign debt.
To support the underlying agricultural cooperatives feeding these systems, the government has set aside 76 billion shillings out of the national budget for the agriculture, rural, and urban development sector.
This allocation includes a boosted 18 billion shilling fertilizer subsidy program, 2 billion shillings for a certified maize seed program and 1 billion shillings for coffee seedlings.
Cooperative leaders hope these targeted injections will stimulate production and ease the high loan demands placed on agro-based SACCOs.
To insulate member deposits from investment risks, the state is introducing a dedicated SACCO deposit guarantee fund. Mirroring protections within the commercial banking sector, the framework aims to shield members against financial losses up to a designated threshold if an institution collapses.
However, critics remain deeply skeptical about whether the capital will reach its intended targets or succumb to historical mismanagement.
“We have seen similar funds swallowed by bureaucratic corruption and political favoritism in the past,” said John Benson, a senior economic analyst at the Heritage Institute. “Without independent oversight, this fund risks becoming a cash cow for well-connected elites rather than a lifeline for ordinary farmers.”
Local cooperative leaders have also expressed strong reservations regarding the government’s access to their massive capital base.
Critics and savers have populated social platforms with warnings over liquidity risks.
“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,” warned Phabian Muok, a finance and civil engineering analyst writing for Mjengo Hub. “Many commenters warn that the plan could reduce liquidity and make it harder for members to access their money when needed.”
Supporters maintain that stricter auditing guidelines built into the new framework, alongside the voluntary nature of the infrastructure investments, will prevent misuse and guarantee that resources directly boost local economies.
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