State Targets More Funding for SACCOs Through National Infrastructure Fund

State Targets More Funding for SACCOs Through National Infrastructure Fund

Savings and Credit Cooperative Organisations (SACCOs) could soon receive increased government support after the State announced plans to channel additional resources to the cooperative movement through the newly established National Infrastructure Fund (NIF), a move expected to strengthen one of Kenya’s largest financial sectors and accelerate ongoing reforms.

The announcement was made by Deputy President Kithure Kindiki during the national Ushirika Day celebrations held at Uhuru Park, where he outlined the government’s strategy of using the National Infrastructure Fund to create more fiscal space within the national budget while freeing up resources for priority sectors, including cooperatives.

The latest commitment comes as the government seeks to strengthen SACCOs, which collectively manage hundreds of billions of shillings in members’ savings and provide affordable credit to millions of Kenyans, particularly salaried workers, small businesses, farmers and informal sector traders.

According to the Deputy President, the National Infrastructure Fund will assume responsibility for financing eligible infrastructure projects that are currently funded directly through the Exchequer.

By transferring such projects to the fund, the government expects to reduce pressure on the national budget and redirect additional funding towards sectors considered critical for economic growth and financial inclusion.

“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 disclosed that the National Infrastructure Fund is already being operationalised after securing approximately KSh345 billion in seed capital generated through the restructuring and sale of selected state-owned agencies and assets.

Government officials say the fund is expected to become a major financing vehicle for large-scale infrastructure projects while reducing dependence on annual budget allocations.

The promise of additional funding comes at a time when Parliament is considering the Sacco Societies (Amendment) Bill, 2025, one of the most significant reform packages for the cooperative sector in recent years.

President William Ruto is expected to assent to the legislation once it completes the parliamentary process.

Among the most notable proposals contained in the Bill is the establishment of a Deposit Insurance Fund, designed to protect SACCO members from losing their savings in the event a cooperative society collapses or becomes insolvent.

Under the proposed framework, members whose SACCOs fail would qualify for compensation based on their protected deposits after accounting for outstanding loans, liabilities and loan guarantee obligations.

However, the Bill proposes a compensation ceiling of KSh100,000 per member, a provision that has attracted criticism from several lawmakers.

Members of Parliament have argued that the proposed limit may not adequately protect members with substantially larger savings accumulated over many years.

Should additional funding become available through the National Infrastructure Fund, the government believes it could accelerate implementation of these reforms while strengthening financial stability across the cooperative movement.

The funding is also expected to support digital transformation within the sector.

Government officials say smaller SACCOs, many of which struggle with limited technological capacity and compliance requirements, could benefit from shared digital platforms and integrated management systems envisioned under the proposed reforms.

Such systems would improve operational efficiency, enhance regulatory compliance, strengthen cybersecurity and lower operating costs by allowing smaller institutions to share common technology infrastructure.

The government’s renewed support reflects the growing importance of SACCOs in Kenya’s economy.

The cooperative sector continues to play a central role in mobilising domestic savings, expanding access to affordable credit and supporting investment in housing, agriculture, education and small businesses across the country.

Nevertheless, the National Infrastructure Fund itself has attracted significant public debate since its establishment.

Critics, including civil society organisations and sections of the opposition, have questioned the fund’s financing model, arguing that disposing of profitable state-owned assets could reduce future government revenues.

Others have expressed concern over governance, transparency and accountability, warning that without robust oversight, the fund could become vulnerable to political interference or be used to finance projects that do not offer value for taxpayers.

Government officials have, however, defended the initiative, insisting that the National Infrastructure Fund will unlock private capital, improve infrastructure financing and allow scarce public resources to be redirected towards strategic sectors such as health, education and cooperatives.

If successfully implemented, the additional investment could strengthen SACCOs’ financial resilience, enhance protection for millions of members and reinforce the cooperative movement’s role as one of Kenya’s most important pillars of inclusive economic growth.

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State Targets More Funding for SACCOs Through National Infrastructure Fund