The Kenya Union of Savings and Credit Cooperatives Ltd (KUSCCO) is exploring the sale of a majority stake in its insurance subsidiary, as well as auctioning assets such as properties held by loan defaulters. This initiative aims to generate funds to reimburse member savings and credit cooperative societies (Saccos).
In light of recent errors and omissions within KUSCCO, Dr. Wycliffe Oparanya, Cabinet Secretary Ministry of Cooperatives and MSMES Development said during a press briefing, investigative agencies have made significant progress. “The outcomes of these investigations are being shared with pertinent organizations to initiate necessary legal and administrative actions. There is strong support for litigation concerning accountability for criminal and economic offenses, along with proceedings aimed at asset recovery. We are assured that those involved in the irregularities at KUSCCO will be held accountable,” he said.
Regarding the implications of a forensic audit conducted by PricewaterhouseCoopers (PwC) on the reputation of Saccos, the CS expressed satisfaction with the government’s commitment to transparency and openness, which is essential for promoting a robust SACCO industry in Kenya.
He commended the interim board for accomplishing several key objectives, including:
- Completing and implementing a statutory and forensic audit.
- Reconciling financial records to reflect the union’s status accurately.
- Developing and enacting a recovery strategy.
The government, in collaboration with cooperative stakeholders, has made notable advancements concerning KUSCCO:
– Legal proceedings and asset recovery actions have commenced following comprehensive investigations.
– KUSCCO is actively selling assets to assist in recovering SACCO funds.
– The organization will focus on advocacy, capacity building, and training.
The interim board has successfully finalized a forensic audit, reconstructed accounts to more accurately represent KUSCCO’s financial position, implemented a strategic recovery plan, and amended its bylaws. Dr Oparanya reassured members that the funds are not lost and will be gradually recovered. A new nine-member board with a three-year mandate will be established to rejuvenate KUSCCO and restore confidence in Saccos as a reliable grassroots investment.
COOPERATIVE REFORMS
Regarding immediate reforms, experts will be brought in to redefine KUSCCO’s mandate, particularly in relation to the Central Finance Fund (CFF), which will now be referred to as the SACCO Liquidity Fund (SLF). This fund is being repositioned as a secondary cooperative under SASRA regulation, ensuring a distinct separation from KUSCCO’s core functions. The SLF will operate under an independent board and CEO, who will manage the recovery and repayment processes of the Saccos owed funds.
The Cabinet has approved amendments to the SACCO Societies Act, including the implementation of a Shared Services Framework and a Central Liquidity Facility. These changes aim to modernize operations, facilitate inter-SACCO transactions, and enable participation in the National Payment System.
A Committee of Experts will also review SACCO regulations and establish the SACCO Liquidity Fund as a secondary cooperative regulated by SASRA. An independent board and CEO will oversee this fund, separate from KUSCCO. To enhance the security of Saccos, a Deposit Guarantee Fund will also be created, with the Treasury allocating Ksh 180 million for the first four years, supervised by a Trustee and SASRA.
