The Appellate Court’s decision that the SACCO Societies (Amendment) Act was unconstitutional was upheld by the Supreme Court on Friday.
The Supreme Court concluded in a decision delivered by Chief Justice Martha Koome that the Act had an impact on the authority and activities of counties and should thus have been taken into consideration by the Senate. As a result, the court declared that its passage without Senate approval was illegal.
The primary goals of the SACCO Societies (Amendment) Act were to oversee, license, and regulate Sacco societies in Kenya. The purpose of the revision was to improve governance, simplify operations, and bring the Act into line with the changing needs of the cooperative and financial sectors.
The changes’ main features included provisions to address insider lending and governance concerns inside SACCO societies, modifications to the licensing requirements for SACCO societies, and increased monitoring and regulatory authority for the Sacco Societies Regulatory Authority (SASRA).
Despite finding the Act unconstitutional, the court postponed the invalidity ruling for 18 months starting on March 21. In order to give the matter time to be resolved, the court postponed annulling it.
Due to the verdict, SACCOs will now have to operate in a regulatory environment that is rather unclear. Saccos may operate under ambiguous transitional regulations during the 18-month period that the Act’s invalidity is suspended, which could lead to uncertainty.
Parliament has a window of opportunity to remedy the court’s constitutional concerns after the suspension. If Parliament wants the law to stay in force beyond the suspension period, it may resubmit the Bill to the Senate for review and enactment in order to address the objections raised.
In addition, the Supreme Court ruled that the Equalization Fund Appropriation Act and the Health Laws (Amendment) Act’s changes to Sections 3 and 4 of the KEMSA Act were unconstitutional.
Koome asserts that the National Assembly erred in passing both Acts without consulting the Senate.
Deputy Chief Justice Philomena Mbete Mwilu, along with Justices Mohammed Khadhar Ibrahim, Njoki Ndung’u, Smokin Wanjala, Isaac Lenaola, and William Ouko, jointly rendered the decision on Friday, March 21.
