The government's plan to regulate the country's fledging co-operative movement through a central authority has to be lauded as it sets the stage for proper regulation of a sector that is too critical to the economy.

The formation of the Societies Sacco Regulatory Authority (SASRA), which will oversee the co-operative movement is expected to streamline their operations given that they handle billions of shillings in member contributions.

SASRA will be to the Saccos what Central Bank of Kenya is to the banks.

The phenomenal growth of the co-operative movement, which has 12,000 Saccos with eight million members and a deposit base of Sh200 billion, covers various sectors of the economy from formal to informal economic activities.

SASRA is expected to ensure members' deposits are protected just like CBK safeguards deposits held by commercial banks.

For many years, the co-operative societies have become avenues of sleaze and citadels of corruption.

That has defeated the essence of the co-operative movement as the driver of urban and rural economic growth.

But despite all these challenges, the co-operative movement has not slackened.

Rather, it has found a base in the common will of a people to look for avenues to get loans and also generate wealth.

This has occurred on the backdrop of less policing bringing to the fore governance issues such as embezzlement of members funds, poor management and lack of guided investment programmes.

Members have in effect realised poor returns, but their spirits have not been shattered.

The new authority will be charged with re-orienting the country's fledging and oldest saving institutions to play a more central role in the national economy - albeit in a co-ordinated manner.

With Saccos required to have minimum capital requirement, non-withdrawable funds, employ professional management members, we can only hope their funds will be much safer and protected from any potential loss.

The requirement for minimum capital base will result in the merger of related Saccos, which will see a decline from the current 12,000 societies.

The merging is expected to lead to bigger and stronger entities in terms of capital base giving them the muscle to engage in large scale capital intensive projects.

However, the biggest challenge that faced the movement in the recent past was the abuse of trust that was done via the pyramid schemes, which were formed as Saccos.

Unsuspecting members of the public were lured into depositing money with the Ponzi schemes on the promise of getting higher returns.

With such a regulatory body in place, we hope that this nation can be able to nip such thuggish organisations before they wreak havoc.

At the management level, lack of professionalism and members' infighting are some of the challenges the movement faces.

There is need to resolve these issues now if the sector is to play a more pivotal role in the country economy.

The reforms include the formation of a co-operative tribunal to try and address the many challenges facing the sector in order to forestall the lengthy court procedures.

We believe that this authority will strengthen rather than forestall the cooperative movement and that Kenyans will have stronger, stable and well managed co-operative societies.

The co-operative movement has been instrumental in providing impetus to other countries in Africa to launch such societies.

Currently, the Kenyan co-operative movement is engaged in launching a similar movement in Rwanda and Southern Sudan where it has sent its professionals to help these countries.

In order to progress further, we must learn from the best on how to run such societies that have been with us for now over 45 years.

The regulatory authority is the way to go and restore hope in the movement.