The government has announced that all public service vehicle (PSV) SACCOs that are not engaged in genuine savings and credit business will be reclassified as Transport Cooperatives or Transcoops.

The Ministry of Cooperatives said the policy change is intended to safeguard the credibility of the SACCO industry and streamline operations within the transport sector.

Cooperatives Cabinet Secretary Wycliffe Oparanya unveiled the plan during the release of the SACCO Supervision Annual Report 2024.

He explained that PSV groups operating purely as transport associations will no longer be allowed to carry the SACCO designation unless they meet the regulatory requirements set out by the SACCO Societies Regulatory Authority (SASRA).

According to Oparanya, misuse of the SACCO label has created confusion among the public and undermined confidence in licensed savings and credit societies.

“There are several transport cooperatives, which are currently registered or operating as matatu or PSV SACCOs,” Oparanya stated.

“These entities are not SACCOs because they are not engaged in the mobilisation of deposits and/or inter-mediating the deposits as credit.”

The CS explained that the said transport cooperatives are just associations of people coming together to operate a transport business or manage routes as required by the National Transport Safety Authority (NTSA). 

The NTSA requires all matatus and public service vehicles to be part of a registered SACCO or PSV company before the Transport Licensing Board grants them certification (TLB).

This policy, which discourages licensing of individual operators, was intended to enforce accountability within the sector.

While addressing the broader challenges facing cooperatives, Oparanya stressed the importance of ethical leadership and accountability.

“Governance in SACCOs is still a matter of grave concern for the government. It is important to emphasise that SACCOs can only thrive in an environment where good governance practices are fully ingrained and practised,” the CS noted.

The Ministry now expects PSV associations to either seek SASRA regulation if they deal in financial services or embrace the new Transcoop identity.

The move, officials said, is aimed at drawing a clear line between financial cooperatives and transport associations, ensuring that SACCOs retain their role as trusted financial institutions.