In a twist, the hammer is now turning against over 50 savings and credit cooperatives (SACCOs) that are at risk of losing their assets due to defaults on loans taken from the Kenya Union of Savings and Credit Cooperatives (KUSCCO). The total outstanding amount has reached Ksh1.36 billion, despite these SACCOs having deposits of only Ksh368.39 million, leaving a substantial shortfall of approximately Ksh987.86 million.
Reports indicate that the majority of the defaulters are SACCOs from western Kenya, with defaults amounting to Ksh325.04 million. Other notable regions include Rift Valley with Ksh95.82 million, Mount Kenya at Ksh80.42 million, and the Coast region with Ksh77.36 million. As a result of their default status, these SACCOs have been barred from distributing dividends to their members.
The Commissioner of Cooperative Development, David Obonyo, issued demand letters to the affected SACCOs, requiring them to either repay their loans or provide a repayment plan within 14 days. Non-compliance may lead to asset auctions and account freezes for these cooperative societies.
This debt crisis has arisen amid a broader investigation into KUSCCO, which has recently been embroiled in a scandal involving alleged financial mismanagement totaling over Ksh13 billion. A forensic audit conducted by PricewaterhouseCoopers (PwC) revealed serious irregularities, including the forgery of signatures by high-ranking executives, which jeopardized Ksh13.3 billion in member deposits.
In an effort to address these challenges and recover funds, KUSCCO resorted to the sale of a majority stake in its insurance subsidiary and auctioning assets to generate the necessary funds to reimburse the affected SACCOs and restore financial integrity to the sector.
Members of SACCOs from across the country hope that the embezzled funds will be recovered, as they rally for accountability and the safeguarding of their savings.
