Principal Secretary in the State Department for Cooperatives under the Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development, Patrick Kilemi, has urged Savings and Credit Cooperative Societies (Saccos) to strengthen their institutional capital and shift focus from competing through high dividend payouts to offering affordable loans that directly benefit members.

Speaking during an interview on a local station on Thursday, July 4, 2026, Kilemi said Saccos must adopt sustainable growth models that strengthen financial stability and improve services offered to members

Kilemi said for years some Saccos have focused heavily on attracting members through high dividend declarations, a trend he argued has sometimes exposed institutions to financial strain.

“We are encouraging our Saccos to grow institutional capital as their core capital. We want them to compete based on loans given to members rather than dividends,” Kilemi said.

Shift from dividends to member support

The PS argued that the primary role of Saccos should be to provide affordable financial support to members instead of focusing on large dividend payouts.

According to him, members often join Saccos mainly to access affordable credit for personal projects, business development and other financial needs.

“We want Saccos to compete on giving members loans at the least interest because members want support to undertake their projects,” he stated.

Kilemi further said the government is pushing for a lower interest rate environment in line with wider economic objectives.

“Our goal is to give members loans at nine per cent under a single-digit regime rather than having Saccos advertising dividends of 20 per cent and above,” he added.

Borrowing concerns raised

Kilemi also raised concern over borrowing practices within some institutions, saying there had been cases where funds were acquired for purposes that did not directly contribute to sustainable growth.

He noted that requests for borrowing approvals had reduced significantly following increased scrutiny from regulators.

“We ask them questions when they bring requests for money. Why are you taking this money?” Kilemi said.

He further warned against borrowing funds simply to sustain dividend payments, saying such practices create artificial performance and may eventually hurt institutions.

Call for sustainable growth

The PS said the cooperative movement remains an important pillar in Kenya’s economic development and urged institutions to prioritise long-term financial health.

He maintained that strengthening institutional capital and reducing dependence on unsustainable borrowing would help Saccos remain stable and better serve their members.

Kilemi said sustainable growth would allow Saccos to continue supporting members while strengthening the wider cooperative sector.