On Friday, the Supreme Court upheld a ruling by the Appellate Court that declared the SACCO Societies (Amendment) Act unconstitutional.
Chief Justice Martha Koome, delivering the ruling, stated that the Act affected the functions and powers of counties and should have been considered by the Senate.
The court concluded that enacting the law without Senate participation was unconstitutional.
“Consequently, we uphold the determination by the Court of Appeal that the Senate should have been involved in the consideration and enactment of the SACCO Societies (Amendment) Act No. 16 of 2018,” the ruling read.
The SACCO Societies (Amendment) Act aimed to regulate, license, and supervise SACCO societies in Kenya.
Key changes included adjustments to licensing requirements, enhancing oversight and regulatory powers for the Sacco Societies Regulatory Authority (SASRA), and addressing issues such as insider lending and governance within SACCOs.
While declaring the Act unconstitutional, the Supreme Court suspended the declaration of invalidity for 18 months, starting from March 21.
This suspension allows time for Parliament to address the constitutional concerns raised by the court.
As a result, SACCOs will continue to operate under uncertain regulatory conditions for the time being.
The suspension period gives Parliament an opportunity to resubmit the Bill to the Senate for consideration and re-enactment if it wishes the law to remain in effect beyond the 18-month window.
In addition to the SACCO ruling, the Supreme Court also declared the Equalisation Fund Appropriation Act and amendments made to Sections 3 and 4 of the KEMSA Act by the Health Laws (Amendment) Act unconstitutional.
Chief Justice Koome stated that the National Assembly was wrong to enact both Acts without involving the Senate.
“The exclusion of the Senate in the enactment of the Equalisation Fund Appropriation Act, No. 3 of 2018, and the amendments to the KEMSA Act under the Health Laws (Amendment) Act was unconstitutional,” the ruling noted.
The ruling was issued by Chief Justice Martha Koome, Deputy Chief Justice Philomena Mbete Mwilu, and Justices Mohammed Khadhar Ibrahim, Njoki Ndung’u, Smokin Wanjala, Isaac Lenaola, and William Ouko.
