NAIROBI, Kenya—Mwai Kibaki, president of Kenya, has signed into law new legislation designed to regulate and support the country's credit unions, known as savings and credit cooperatives, or SACCOs. The bill, passed by the Kenyan Parliament Nov. 14, is the result of several years of efforts by World Council of Credit Unions (WOCCU), the Kenya Union of Savings and Credit Co-operatives Ltd. (KUSCCO), WOCCU's member organization, and the Pennsylvania Credit Union Association (PCUA) and several of its member credit unions.
"This is a significant step for Africa's SACCO movement," said Brian Branch, WOCCU's executive vice president and COO who helped spearhead the initiative six years ago. "SACCOs have grown quickly and are major providers in Kenya's financial market. As such, they have come under increased popular pressure for greater levels of prudential supervision designed to protect SACCO members."
The new legislation provides updated frameworks for SACCO safety and soundness, as well as for the services they offer, enabling them to compete on more even footing with the country's banks. The law, which stalled in Parliament for the past three years, grants the establishment of a regulatory authority for the country's cooperative societies that provide savings and credit services to millions of Kenya's working population.
The new legislation will bring greater order to a segment of the financial services industry whose regulations were previously lax. New regulatory provisions will establish a deposit guarantee fund, require SACCOs to meet certain liquidity requirements to remain competitive and enable SACCOs to offer money transfers and diversify revenue sources.
WOCCU continues to work to strengthen SACCO operations and create a healthier regulatory environment in Kenya, according to Branch. Rising food prices and civil unrest make access to financial services for the poor even more critical.
WOCCU has served as an information and advocacy resource to those writing the bill. As part of those efforts, the global credit union trade organization also brought Kenyan government officials to the United States to meet with representatives from the National Credit Union Administration, the National Association of State Credit Union Supervisors and PCUA. In addition, representatives from PCUA and American Heritage Federal Credit Union in Philadelphia, Pa., and Service 1st Federal Credit Union in Danvilla, Pa., traveled to Kenya to advocate on behalf of stronger, more credit union-appropriate legislation with Kenya's Parliament.
"The SACCO bill has passed and this is the happiest day of my life," said the Hon. Ntoitha M'Mithiaru, a Kenyan Parliamentarian. "Thank you, WOCCU, PCUA and others. Thank you."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 105 countries serve 217 million people. Learn more about World Council's impact around the world at www.woccu.org.