The government has sent a stern warning to officials engaging in fraud within the cooperative movement.
Co-operatives Cabinet Secretary (CS) Simon Chelagui said the government will take stringent measures against fraudsters within the sector.
"We will protect the sector and the interest of members against rogue characters, either individuals, managers, or management boards," he said.
The CS said the State will empower the asset recovery unit to go after anyone out to defraud Kenyans using the Sacco spirit that Kenya has established over the years.
He was speaking in Nairobi during the 50-year anniversary celebrations of the Kenya Union of Savings and Credit Co-operatives (Kuscco).
In 2019, the Ministry of Trade under which the co-operatives sector operated conducted an inspection that brought to light the sad state of cooperative societies.
Notably, Machakos and Mombasa counties were marked as having more collapsed institutions than thriving ones, while roughly half of the 1,150 Saccos registered in Mombasa, Kwale, Tana River, Kilifi, and Taita Taveta had closed shop.
The Sacco Societies Regulatory Authority (Sasra) suspended several institutions between 2019 and 2020 for breaching regulations and mismanagement of member contributions.
These and other cases surrounding the operations of savings societies captured the attention of the nation, leading then-President Uhuru Kenyatta to give a directive on the establishment of the Sacco Societies Fraud Investigation Unit.
Principal Secretary in the ministry Patrick Kilemi highlighted the sector's role in driving the affordable housing agenda.
He said Kenya's development has for long been pegged on cooperatives, crediting them for the growth of most towns in Kenya.
"The sector has a good role in supporting the government's affordable housing agenda. Indeed, co-operatives are among the biggest owners of the land, making the model of cooperatives stand out," Mr Kilemi said.
The cooperative movement has registered huge growth after the first Sacco was started in 1964.
"We can confidently say that Kenya has the most successfully implemented Sacco-specific law in Africa because Saccos were given an opportunity to critique and add comments to the law. They were involved every step of the way," said Kuscco Managing Director George Ototo during the anniversary celebrations.