In a broader sweep, attention is now zeroing in on various apex co-operative entities suspected of overstepping their advocacy roles to delve into financial service provisions for SACCOs.
With the government swiftly moving to restructure operations at the Kenya Union of Savings and Credit Co-operatives (KUSCCO), attention is slowly shifting to other national co-operative organizations.
In a dramatic pivot aimed at reshaping Kenya’s co-operative landscape, the government has taken decisive action to overhaul the operations of KUSCCO amid mounting controversies.
The spotlight turns to KUSCCO after allegations emerged of the union operating an unlicensed inter-lending facility, alongside accusations of unauthorized loans and credit allocations to top-tier staff and directors.
In a broader sweep, attention is now zeroing in on various apex co-operative entities suspected of overstepping their advocacy roles to delve into financial service provisions for SACCOs.
Simon Chelugui, the Cabinet Secretary for Co-operatives and MSMEs Development, issued a formidable warning against corruption within the co-operative sector during the Annual Sacco Subsector Regulatory Policy and Legal Roundtable, 2024, held in Naivasha, marking a pivotal moment in Kenya’s co-operative governance.
“The organization operated illegally for over 30 years without anyone intervening. Today, a staggering Ksh 11 billion is unaccounted for, equal to the budget of three entire ministries,” stated the CS.
Starting in October 2023, KUSCCO came under investigation due to serious mismanagement and financial irregularities. A ministry inspection revealed that the organization’s management engaged in activities that resulted in a significant loss of approximately Ksh5.5 billion, linked to questionable transactions dating back to February 2013. In response to these discrepancies, several high-ranking officials were terminated to facilitate a comprehensive review of the union’s financial practices and overall operations.
The government’s commitment to improving governance standards within the co-operative sector was evident in its decision to dissolve KUSCCO’s board of directors. An interim board, comprised of 15 prominent leaders from related co-operatives, was appointed to address the situation in accordance with the Co-operative Societies Act. Mr. David Mategwa leads the interim board, which has one month starting 5th June this year, to deliver a diagnostic report on the union’s status and a plan for its revival.
The government has pledged its support to ensure that those responsible for misusing union funds would be held accountable by the law. The ongoing investigation was also emphasized to reassure stakeholders with a clear message that individuals found to be at fault would face legal consequences.
“We must uphold transparency and responsible management in the co-operative sector. Through strict oversight and governance reforms, we will protect the interests of stakeholders. We will not tolerate the unauthorized use of public funds by unlicensed entities such as Kiosk Saccos, which operate in a manner similar to pyramids. This should be prohibited through proper licensing,” stated Chelugui.
He called on the Sacco Societies Regulatory Authority (SASRA) through Sacco Societies Fraud Investigation Unit (SSFIU) to take decisive action against those who are accepting deposits without a license, including shutting down such entities.
“SSFIU’s primary focus is tackling financial fraud within the sector, not cattle rustling. We must safeguard the reputation of the co-operative movement and the ministry from being tarnished by a small group of individuals. The co-operative movement holds the future of Kenya. When entrusted with leadership, it is crucial not to betray that trust,” he emphasized.
