The rules that govern your SACCO: Acts, regulations and by-laws

Governance Updated

The rules that govern your SACCO: Acts, regulations and by-laws
Figure 1: The rules that govern your SACCO: Acts, regulations and by-laws

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Every SACCO sits inside a framework of rules. Some come from the law and the regulator, and some the SACCO writes for itself. Knowing which rule applies, and keeping each one current, is one of the quietest but most important jobs a board and management do.

Why it matters: a SACCO that lets its by-laws drift, ignores a reporting deadline, or lends outside its own policy risks fines, suspension, or de-registration. Staying compliant is what keeps the licence to operate and protects members' savings.

The law: acts and their regulations

The top layer is national legislation, which you must follow whether you like it or not.

  • Cooperative law governs how a SACCO is registered, run and dissolved. In Kenya this is the Co-operative Societies Act (Cap 490); in Tanzania, the Cooperative Societies Act, 2013; in Uganda, the Cooperative Societies Act (Cap 112, amended 2020). All three do the same job under different names and dates.
  • Because a SACCO takes deposits and lends, it also falls under microfinance law, with its own dedicated regulator (see below). In Kenya this is the SACCO Societies Act, 2008; in Tanzania, the Microfinance Act, 2018 and its SACCO-specific regulations; in Uganda, the Tier 4 Microfinance Institutions and Money Lenders Act, 2016.
  • An Act gives the broad law; the regulations spell out the detail — limits, forms, ratios and deadlines. Both bind you, and both can change, so confirm the current versions with your own regulator rather than assuming last year's rule still applies.

Who regulates you

Two authorities matter most in every country, and it pays to know which does what.

  • The cooperative registrar registers the SACCO, holds its by-laws on record, and oversees cooperative governance and the AGM. In Tanzania this is the Registrar of Cooperatives, the "Mrajis"; in Kenya, the Commissioner for Co-operative Development; in Uganda, the Registrar of Cooperative Societies (who is, by law, also the Commissioner for Cooperative Development).

  • The prudential regulator supervises SACCOs as deposit-takers and sets capital, liquidity and reporting standards. Each country draws this line differently:

    • Kenya — deposit-taking SACCOs, plus the largest non-deposit-taking ones, are supervised by SASRA (the SACCO Societies Regulatory Authority). Smaller, savings-only SACCOs stay with the Commissioner for Co-operative Development. The Central Bank of Kenya has no direct role here.
    • Tanzania — the Bank of Tanzania is the statutory regulator, but it has delegated day-to-day SACCO supervision to TCDC, the Tanzania Cooperative Development Commission — the same body that acts as Registrar.
    • Uganda — most SACCOs are licensed by UMRA (the Uganda Microfinance Regulatory Authority) as one of four Tier 4 microfinance categories. The largest SACCOs, above a savings-and-capital threshold set in the Tier 4 Act, move to direct licensing by the Bank of Uganda instead.

    Whichever applies to you, that's who sets your prudential rules and receives your returns — know which one before a deadline finds out for you.

Your by-laws, the SACCO's constitution

By-laws are the rules the members themselves adopt at the AGM, within what the law allows.

  • They are legally binding once registered, and they cover membership, shares, the board, committees, meetings and how surplus is shared.
  • Keep them current. When members vote to change a by-law at the AGM, the change must be lodged with the Registrar. An out-of-date registered copy is a compliance gap.

The policy manual, your internal rulebook

Below the by-laws sits the policy manual: the day-to-day rules approved by the board.

  • Savings, credit, finance, cash handling and HR should each have a written, board-approved policy.
  • Review it regularly. Policies should be revisited at least yearly so they match current practice, the law and CAMS controls.
  • Follow it in practice. A policy ignored is worse than none, so lend, spend and hire by the manual, every time.

Comply and report

Compliance is proven by what you file and how you behave, not by intention.

  • Meet every deadline. Submit audited accounts, returns and prudential reports on time to the Registrar and the regulator.
  • Hold the AGM and file its records. A timely AGM with elections and approved accounts is itself a compliance duty.

Four layers of rules: the Act, its Regulations, your registered by-laws, and the board-approved policy manual
Figure 2: Four layers of rules: the Act, its Regulations, your registered by-laws, and the board-approved policy manual

Quick checklist

  • Keep a current, registered copy of your by-laws and lodge any AGM changes with the Registrar
  • Confirm which Acts and regulations apply to you in your country and tier
  • Ensure savings, credit, finance, cash and HR policies are written and board-approved
  • Review the policy manual at least once a year and act within it
  • Diarise every reporting deadline for the Registrar and the microfinance regulator
  • Hold the AGM on time and keep its minutes and approved accounts on file