The State Department of Co-operatives has cautioned saccos against aggressive expansion into specialised investment schemes such as special funds and offshore placements even as the sector’s investment portfolio nears Sh100 billion.
Principal Secretary for Co-operatives Patrick Kilemi warned sacco managers and directors against deploying members’ money into investments promising higher returns but potentially carrying greater risks than traditional instruments such as government securities.
‘When members ask ‘Where is our money?’ they must see that you (management) made a prudent decision,’ Mr Kilemi said.
‘I am a Mansa (investor in Standard Investment Bank’s Mansa-X, a special collective investment scheme product), but I would not approve of saccos making decisions about people’s money to go and do the kind of things we do out there with our personal money,’ he said.
The warning comes as Sacco Societies Regulatory Authority (Sasra) data showed financial investments by regulated saccos rose 63 percent to Sh99.81 billion in 2025, up from Sh61.21 billion a year earlier.
The increased portfolio was driven partly by a rise in collective investment schemes, which include money market funds and unit trusts. Sacco holdings in these vehicles more than tripled to Sh19.55 billion in 2025 from Sh5.52 billion in 2024, taking their share of the investment portfolio to 19.79 percent from 9.02 percent.
Collective investment schemes pool money from investors into assets such as government securities, fixed-income instruments, equities and other approved investments.
On the other hand, special funds can target more specialised or alternative assets and may offer higher returns. The special fund invests according to the asset manager’s strategy and is unconstrained. However, the potential for higher yields can also come with higher investment and liquidity risks.
Mr Kilemi said sacco officials should distinguish between decisions they make with their personal money and those involving members’ funds.
‘As a CEO or director, you can go offshore, even in the Cayman Islands. But when it comes to sacco funds, it is a question of responsibility and having control,’ he said.
The Capital Markets Authority in July cautioned investors against funds making promises of abnormal returns, amid growing interest in alternative investment products. The special funds accounted for a 23.9 percent share of collective investment schemes as of the end of March 2026, with Sh203.5 billion packed into them.
Government securities remained the largest single traditional investment class, with saccos’ holdings rising to Sh23.64 billion in 2025 from Sh21.35 billion. The regulator said their continued popularity reflects their relatively low risk and liquidity.
However, the strongest growth outside collective investment schemes was recorded in sacco-linked investments. Placements in national co-operative organisations (NACOs) rose to Sh25.68 billion from Sh14.33 billion, while sacco shares in NACOs increased to Sh29.99 billion from Sh19.31 billion.
Sasra attributed the increased placements in NACOs to higher inter-sacco collaboration, improved confidence in co-operative institutions, liquidity management needs and the desire to strengthen ownership within the movement.
Mr Kilemi said the sector needed to strike a balance between public oversight and private decision-making, particularly when members’ savings are at stake.
‘The question about saccos is a pendulum that keeps swinging between public and private. What we see as government is that when there is a problem, the pendulum moves a lot towards public, but when thriving, it is very private. Let the pendulum be in the middle,’ he said.