Kenyans’ SACCO Savings Face Scrutiny as Govt Ties Hustler Pension to SACCOs

In Summary

• Kenya is saving Ksh63 billion annually from reduced borrowing costs, but the country’s growing debt remains a major economic risk.
• The government plans to integrate the Hustler Pension Scheme with SACCOs to improve retirement savings for informal workers while strengthening SACCOs and enhancing financial stability.
• Kenyans depositing money in SACCOs will face stricter scrutiny under the Anti-Money Laundering Bill 2025, with SASRA enforcing compliance through identity verification and transaction monitoring.
• Several counties have overspent billions without approval, while others keep large sums unused, worsening pending bills.
• Kenya’s rising domestic debt, driven by unexpected borrowing and delays in external funding, could reduce private sector credit, increase loan repayment costs, and worsen the country’s financial stability.
• The Ministry of Health is seeking additional funds to cover foreign travel, legal battles, and critical health sector needs, despite previous government directives to limit non-essential expenditure.
• The 2024 AKI Awards celebrated excellence in Kenya’s insurance sector, recognising leading firms and agents while highlighting the industry's need for increased penetration and innovation.
• TSC is pushing for additional funds to confirm intern teachers on permanent terms, enhance their benefits, and address financial gaps in the education sector.
  
  

Controller of Budget Margaret Nyakang’o has revealed that 16 counties exceeded their approved budgets, with some diverting funds meant for specific programmes while others kept billions idle, as reported by The People’s Daily. Her report for the first half of the 2024/25 financial year highlighted Bungoma, Machakos, Kilifi, and Turkana among those overspending, with Machakos using Ksh5.97 billion against an approved Ksh4.77 billion (125%). She warned that these practices are worsening pending bills, which hit Ksh182.13 billion by December 2024. Only seven counties, including Nairobi and Embu, fully complied with approved budgets. 

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Kenyans depositing money in SACCOs will face increased scrutiny on the source of their funds under the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill 2025. The Bill empowers the Sacco Societies Regulatory Authority (SASRA) to regulate and supervise SACCOs for anti-money laundering (AML), counter financing of terrorism (CFT), and counter proliferation financing (CPF). SACCOs will be required to verify members’ identities, report suspicious transactions, and maintain detailed records. SASRA will also vet key officials and conduct both on-site and off-site inspections. Non-compliance could attract penalties of up to Ksh5 million for SACCOs, Ksh1 million for individuals, and an additional Ksh 100,000 daily fine for continued violations.

The Kenyan government plans to integrate the Hustler Pension Scheme with SACCOs to help informal sector workers save for retirement, as reported by The Business Daily. Through this initiative, SACCOs will serve as a channel to expand financial inclusion, with members voluntarily contributing while the Treasury matches Ksh1 for every Ksh2 saved. Additionally, 5% of every Hustler Fund loan borrowed will be set aside for retirement savings. The government has requested Ksh500 million to support the programme, which aims to strengthen SACCOs and improve financial security for Kenyans.

The Treasury has borrowed Ksh220 billion more than the limit approved by Parliament, with Principal Secretary Chris Kiptoo attributing the excess borrowing to delays in foreign financing. MPs warned that increased domestic borrowing, now at Ksh624 billion, could crowd out private sector credit and worsen Kenya’s debt burden. The government had initially planned to borrow Ksh263.2 billion locally but revised the figure upward after the Finance Bill, 2024, was rejected. With commercial banks holding 45% of government securities, concerns have been raised over costly short-term loans, contradicting Treasury’s policy of prioritising concessional financing, as reported by The Eastleigh Voice.

In a report by The People’s Daily, Treasury CS John Mbadi has stated that Kenya can replace the financial support previously provided by USAID through efficient economic management, as the country is currently saving Ksh63 billion annually due to a reduced borrowing rate of 9%. Speaking at the National Youth Dialogues in Mombasa, Mbadi revealed that the savings surpass the Ksh52 billion USAID used to provide and could fund all 290 constituencies' CDF projects for a year while also covering first-term school capitation costs of Ksh48.8 billion. However, he warned that Kenya’s total debt has reached Ksh11.02 trillion, with domestic debt standing at Ksh5.83 trillion and external debt at Ksh5.19 trillion. The CS pointed out that Kenya faces a financial crisis as many loans are maturing around the same time, including multiple Eurobonds, which will require large repayments in the coming years. He noted that the country had to issue a new Eurobond to refinance a maturing one last year, pushing financial obligations further into the future, with major repayments due from 2025 to 2036. 
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APA Insurance was named Company of the Year – General Insurance at the 2024 AKI Awards, with Jubilee, CIC, Old Mutual, and Britam also receiving top honours. CIC was recognised as the most improved company, while Jubilee recorded the second-highest growth in policies sold. According to The Standard, the awards also celebrated outstanding agents, with APA’s Charlene Kimara named Medical Insurance Agent of the Year. AKI Chairman Nixon Shigoli highlighted the strong presence of women in insurance sales, noting that 66% of top-performing agents were women. Despite the sector’s growth, insurance penetration remains below 3%, with firms now leveraging technology and micro-insurance to reach the informal market. 

Medical Services Principal Secretary Harry Kimtai has requested Ksh500 million in additional funding for foreign travel and legal fees over the next 3 months. In a report by The People’s Daily, Ksh350 million is meant for travel by him and Cabinet Secretary Deborah Barasa due to Kenya’s East African Community chairmanship, while Ksh142.2 million is for legal costs related to the appeal against the High Court ruling on the Social Health Insurance Act, Primary Health Care Act, and Digital Health Act. Kimtai also revealed the ministry needs an extra Ksh6 billion for primary healthcare and emergency medical funds, Ksh700 million for presidential health projects, and Ksh64 million to settle COVID-19 vaccine bills. 

The Teachers Service Commission (TSC) is requesting an additional Ksh30.4 billion to confirm 46,000 intern teachers on permanent and pensionable terms and provide them with medical insurance. The People’s Daily reports that of this amount, Ksh13.8 billion will go towards absorbing 21,550 junior secondary school teachers, 4,000 primary school tutors, 18,000 junior secondary interns, and 2,000 primary school interns. Additionally, Ksh9.3 billion is needed for teachers’ medical insurance, while Ksh4.3 billion will cover the exchequer shortfall for the 2023/2024 financial year. The government had initially introduced intern teachers to bridge the staffing gap in junior secondary schools, and Education CS Migos Ogamba reaffirmed their permanent employment as a promise made to the Kenya National Union of Teachers (KNUT).