The government has appointed a new Board of Directors to manage the affairs of the now-insolvent Kenya Union of Savings and Credit Cooperative Organizations (KUSCCO). The new Board, chaired by Mr. David Mategwa, who is also the Chairman of the Kenya National Police Deposit-Taking SACCO, will serve a term of two years. Other members include Jennifer Mburu (National Vice Chairman, Mhasibu SACCO), Robert Njue (Director at WINAS SACCO), Ms. Osmane Khatolwa (Director at Stima SACCO), John Ziro (Director at Imarika SACCO), Philip Rirei (Director at Noble SACCO), and Michael Muriithi (Board Director, Unaitas SACCO).
Additionally, Ms. Priscilla Maranga (Board Director-Representative, Office of the Commissioner), Dr. Brenda Obondo (Director, KMA SACCO), Ms. Mary Kweyu (Board Director, Invest & Grow SACCO), and Dr. Charles Kioko (CEO, GDC SACCO) will also serve on the Board.
“The new board has been tasked with spearheading key initiatives, including restructuring the Union to enhance efficiency and good governance, recovering assets to protect the interests of cooperative members, and preparing KUSCCO for its transition into a Federation,” said Dr. Wycliffe Ambetsa Oparanya, Cabinet Secretary for the Ministry of Cooperatives and Micro, Small, and Medium-Sized Enterprises (MSMEs) Development.
The term of the previous KUSCCO board, which was formed in May 2024, has now expired. This board, led by Mategwa, had is responsible for developing and implementing a rescue plan for the Union, reconstructing its financial records, conducting a forensic audit, and amending the Union’s bylaws to incorporate recommendations from the recovery strategy.
“The appointment of the new Board is a crucial step in revitalizing KUSCCO and ensuring its stability and growth in alignment with the government’s cooperative sector reforms,” stated CS Oparanya.
While the original founders of KUSCCO aimed to provide advocacy services for the cooperative sector, the largely unregulated Union developed ambitions for greater financial gains over the years. Initially, it established a lending facility that allowed SACCOs with surplus cash to deposit their funds and earn interest, while those facing liquidity challenges could borrow to stabilize their cash flow.
Over time, KUSCCO diversified its operations, offering specialized financial products and services to SACCOs without any oversight from regulatory authorities like the SACCO Societies Regulatory Authority (SASRA), the Commissioner, or the Ministry overseeing the cooperatives sector.
The situation escalated when the Ministry attempted to take over the operations of the Union’s Central Finance Facility (CFF), leading to a run on this platform, which was the main source of revenue for KUSCCO. Panic withdrawals by several large depositors (SACCOs) triggered the financial collapse of KUSCCO.
At this point, senior management at KUSCCO became implicated in various financial irregularities, including forging the signature of a deceased auditor in an effort to conceal fraudulent activities within the Union.
While the government has initiated efforts to trace some of the stolen funds and hidden assets, the SACCOs most affected by the KUSCCO turmoil have been compelled to make provisions in their accounting records. This is in accordance with strict directives from SASRA and guidelines outlined in the International Financial Reporting Standards (IFRS).
