The Kenya Union of Savings and Credit Cooperatives (KUSCCO) Ltd is set to be wound up after shareholders approved a structured liquidation of the more than five-decade-old SACCO umbrella body, marking the end of one of Kenya’s most significant cooperative institutions in its current form.
The resolution was passed during a Special General Meeting (SGM) convened by Commissioner for Cooperative Development David Obonyo on Friday, August 28, 2026, at All Saints’ Cathedral in Nairobi. Shareholders were told that KUSCCO’s asset base stood at approximately KSh5.4 billion against liabilities exceeding KSh17 billion, a shortfall far steeper than earlier estimates that had put the Union’s operating deficit at around KSh5 billion, and later at over KSh14 billion, as the scale of the crisis became clearer in the run-up to the meeting.
The Commissioner has been mandated to oversee an orderly wind-down of the Union, including securing and realizing its assets, settling outstanding liabilities and liquidation costs, and distributing any residual proceeds as provided by law.
A crisis years in the making
KUSCCO’s collapse has its roots in financial irregularities that surfaced after members complained they could not access their investments. Evidence presented before the Senate Standing Committee on Trade, Industrialization and Tourism showed that an inspection launched in 2023 found the Union’s loan book had been overstated by more than KSh7.6 billion. Forensic audits by Grant Thornton LLP and PwC followed, uncovering what court records describe as systematic deficiencies in the management of resources and unreliable financial records.
The revelations triggered a major shake-up of KUSCCO’s leadership and regulatory intervention, even as lawmakers questioned how the misstatements went undetected despite a representative of the Commissioner’s office sitting on the Union’s board.
Mounting legal pressure added to the strain. In one prominent case, the Co-operative Tribunal ordered KUSCCO to refund KSh489 million to a SACCO over a dispute involving matured fixed-deposit investments. Other SACCOs and creditors pursued similar claims, with some stakeholders reportedly declining arbitration in favour of court action, and concerns raised over aggressive enforcement attempts at the Union’s premises.
The financial and legal pressure divided stakeholders during the SGM, with some pushing for government-backed rescue and restructuring, and others favouring dissolution outright. That debate has now been settled in favour of liquidation.
A new federation takes shape
Alongside approving the liquidation, shareholders also endorsed the establishment of a new national association to carry forward SACCO advocacy, education and training, research, and consultancy services, ensuring continuity for the sector even as KUSCCO itself winds down.
Commissioner Obonyo has urged cooperatives to organise themselves to establish this successor body, to be known as the Kenya Federation of Savings and Credit Cooperatives (KEFESCO) Ltd, and pledged his office’s support in facilitating the transition. A small team of seven cooperative leaders is expected to work with the Commissioner’s office to guide the federation’s formation.
KUSCCO, established in 1973 and counting more than3,000 members, has long served as the principal umbrella body for Kenya’s savings and credit cooperative movement. Its liquidation closes a turbulent chapter for the institution, while KEFESCO’s emergence is being positioned as the start of a new one, offering SACCOs a fresh, and stakeholders hope more stable, national voice.
Co-op News will continue following developments as the liquidation process and KEFESCO’s formation unfold.
