NAIROBI, April 24, 2025: Kenya’s remittance market is growing rapidly, with inflows reaching nearly USD 5 billion in 2024, according to the Central Bank of Kenya [CBK].
However, while Savings and Credit Cooperative Societies [SACCOs] play a crucial role in Kenya’s financial ecosystem—serving 6.8 million members out of a 34.5 million adult population in 2023—they have remained largely excluded from direct participation in the remittance market due to regulatory constraints. That is about to change.
In March 2025, Kenya’s Cabinet approved the SACCO Societies [Amendment] Bill, 2023, signalling a fundamental shift in the regulatory landscape. Among other measures, the Bill introduces the SACCO Shared Services Framework, a long-anticipated step toward operationalising SACCO Central.
SACCO Central is designed to act as a licensed, centralised hub, providing services such as:
- Clearing and facilitation of settlement of payment instructions
- Direct access to the national payments system
- Emergency liquidity facilities, similar to those available to banks via the interbank market
- A shared technology platform to support SACCO operations
- Centralised foreign exchange and remittance licensing on behalf of SACCOs
These developments provide the clearest pathway yet for SACCOs to participate directly in national payments and in the international remittance market—a game-changing opportunity, especially for rural SACCOs and their members.
SACCOs have long been instrumental in advancing financial inclusion, particularly for underserved rural communities. According to FinAccess 2024, SACCO usage rose from 9.6% in 2021 to 11.7%, driven by their competitive loan products during a period of high interest rates.
Despite strong member demand and interest from SACCOs, direct remittance services have not been legally permitted. A recent study by FSD Kenya, SASRA, and IFAD revealed that over 20% of SACCOs already offer remittances through indirect channels, and a further 50% are eager to enter the space.
Historically SACCOs have had only limited and complex options for participating in the remittance market, including:
- Applying for a Money Remittance Operator [MRO] licence – an option that requires establishing a limited liability subsidiary with KES 20 million in capital and adhering to restricted activities.
- Seeking exemptions from CBK or Treasury – including permission to handle foreign exchange or to be recognised under the National Payment Systems Act for payment clearing, both of which require extensive regulatory engagement and are not yet in practice.
- Operating through indirect partnerships – often ineffective due to unclear commercial models and limited integration.
While these avenues remain legally viable, the creation of SACCO Central aims to simplify and consolidate SACCOs’ access to the remittance market under a regulated, shared structure. It would also reduce compliance burdens by centralising key functions and licenses.
The operationalisation of SACCO Central aims to address key regulatory barriers but also creates opportunities for SACCOs to build sustainable, member-driven remittance services. To make the most of this shift, SACCOs must strengthen their strategic and operational readiness, including:
- Strategic partnerships: Collaborate with licensed remittance players [banks, MTOs, fintechs] and leverage SACCO Central’s infrastructure to offer competitive services.
- Business strategy and execution: Develop clear plans that define key remittance corridors, diaspora propositions, marketing and outreach efforts, and member acquisition initiatives in both sending and receiving countries.
- Tailored remittance products: Bundle remittance services with SACCO offerings—such as diaspora savings accounts, loans, insurance, and investment products—to create value for both senders and recipients.
- Digital infrastructure: Invest in IT systems that support secure, real-time digital remittances via mobile wallets, bank accounts, cards, and cash.
- Foreign exchange and liquidity management: SACCO Central can help standardise FX operations and support liquidity needs, especially in Kenya’s net inbound remittance environment.
- Deposit-taking capability: SACCOs must be licensed as deposit-taking entities to fully support cash-in/cash-out, account-to-account transfers, and loan repayments via FOSAs.
The SACCO Central reforms also align with broader sectoral efforts. Through IFAD’s Financing Facility for Remittances (FFR), two projects in Kenya have supported SACCO remittance readiness via technical assistance and grants. These projects have demonstrated that SACCOs—particularly in rural areas—are well-positioned to reach underserved communities.
One such initiative involved Credit Bank and Skyline SACCO, now co-developing a remittance strategy grounded in SACCO operations and local market realities. Insights from this collaboration, as well as earlier research by FSD Kenya and SASRA, are shaping practical guidance for other SACCOs in close cooperation with the National Remittance Stakeholder Network [NRSN]. The scope of the upcoming activities is:
- Demonstrate the value proposition for diaspora-focused remittance solutions by developing and testing a product strategy tailored for SACCOs.
- Develop a comprehensive remittances toolkit to guide SACCOs in launching and scaling remittance solutions
- Facilitate knowledge exchange by sharing insights on successful business models, marketing strategies, and best practices to enhance SACCOs’ ability to serve their members through remittance services.
- Leverage technology and strategic partnerships to enhance the accessibility, affordability, and efficiency of remittance solutions within the SACCO sector.
- Align with the Kenya Diaspora Policy 2024, which emphasises the need for innovation in remittances to reduce costs, improve efficiency, and maximise the economic contributions of the Kenyan diaspora.
With the Cabinet’s approval of the SACCO Societies [Amendment] Bill and the development of SACCO Central, Kenya is entering a new era for cooperative finance. For the first time, SACCOs could have a dedicated, regulated platform to participate directly in the remittance ecosystem, making it easier to serve their members, reach new markets, and strengthen financial inclusion.
Now is the time for SACCOs to prepare. By aligning strategy, building partnerships, and investing in systems, they can fully capitalise on this moment—and become key players in the future of remittances in Kenya.
SOURCE: FSD KENYA
https://thecooperator.news/kenyan-saccos-outshine-banks-in-loan-market-amidst-high-interest-rates/
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