The news of a financial scandal within Kenya Union of Savings and Credit Co-operatives Ltd (KUSCCO) erupted like wildfire, leaving Sacco investors gasping in disbelief. The media seized the moment, crafting a dramatic narrative that suggested an impending collapse of the entire Sacco landscape— painting an exaggerated portrayal of the situation reality.
In response, the government acted with urgency, their resolve imperceptible as they pledged to bring the crooked union officials to justice. The top leaders of the SACCOs’ umbrella organization were swiftly disbanded, a move that underlined the seriousness of the crisis. Yet, despite these swift actions, the sector’s reputation was left tarnished. The trust had been shattered, leaving Sacco leaders grappling with reassuring their members about their strategies for navigating the fallout.
Annual General and Delegate meetings became battlegrounds of anxiety, the atmosphere thick with tension. SASRA’s directive mandating Saccos to make provisions on their investments in KUSCCO only exacerbated the situation, squeezing members tighter and gnawing at their dividends.
Founded in 1973, KUSCCO has long been celebrated for bolstering SACCOs’ sustainability through financial guidance and capacity-building initiatives. It is crucial to remember that this financial debacle is attributed to a handful of reckless individuals rather than representing the integrity of the whole organization. But again, the fish rots from the head, they say. In late January, the government, via the Ministry of Cooperatives, announced the indictment of several errant former union officials tied to the scandal. Will their cases drag on for years?
An interim board has been appointed to shepherd the recovery process, conducting a thorough forensic audit. This board has also launched a strategic recovery plan and revised the union’s bylaws to enhance governance and accountability. These initiatives lay a solid foundation for KUSCCO’s revival as a respected entity within the cooperative movement. The ministry says it is committed to steering the union away from extraneous activities, confining its operations to essential functions like advocacy, capacity building, and training for SACCOs.
“The reforms we are instituting serve to restore faith in the SACCO sector and reaffirm its role as a cornerstone of financial inclusion and economic empowerment for all Kenyans,” asserted Patric Kilemi, the ministry’s Principal Secretary, during a press briefing in early March. This concerted effort by the ministry highlights KUSCCO’s vital role in advancing the cooperative movement and uplifting the lives of countless Kenyans.
A close examination of the financial results from SACCOs for the year 2024 reveals a sector that is not only enduring but thriving amidst adversity. Indeed, 2024 emerged as a year of remarkable resilience for many SACCOs, as they achieved impressive growth in their total asset base. Notable performances included the Kenya National Police DT Sacco, which recorded a robust 10% growth in total assets, reaching Ksh 59.8 billion, while members enjoyed a generous 17% dividend on their share capital. Imarika Sacco also shone brightly, with its balance sheet swelling by 11.5% to Ksh 14.6 billion in 2024. Hazina Sacco celebrated a historic leap in income, soaring to Ksh 2.08 billion.
For many Kenyans seeking affordable loans, savings, and salary deposits, Saccos continue to be the preferred financial institutions. The FinAccess Survey (2024) showcased a remarkable 74.9% usage rate of Saccos for loans, eclipsing the 58.7% rate of banks, solidifying the SACCOs’ vital role in the financial landscape.
Saccos remain the heartbeat of financial inclusion, mobilizing over Ksh 1 trillion in deposits and empowering 27 million households.
During a speech at the KUSCCO Headquarters, Wycliffe Oparanya, the Cabinet Secretary for Co-operatives and Micro, Small, and Medium Enterprises (MSMEs) Development, confirmed that investigative agencies have completed their work and shared their findings with the relevant authorities.
Oparanya noted that PricewaterhouseCoopers’ (PwC) release of a Forensic Audit Report is a significant milestone in restoring credibility to the SACCO industry. The report reaffirms the Ministry’s commitment to transparency and accountability.
The CS announced that the Cabinet had approved amendments to the SACCO Societies Act of 2008 under the SACCO Societies (Amendment) Bill of 2023. The proposed reforms aim to modernize SACCO operations by introducing a shared services framework to enhance efficiency. This includes establishing a central liquidity facility to facilitate inter-SACCO transactions, access to short-term loans, and participation in the National Payment System.
He urged co-operative leaders to take advantage of the opportunities presented by the 2025 UN International Year of Co-operatives to highlight their positive impact on communities. He expressed confidence that the co-operative movement will grow stronger and benefit millions of members.
“With these bold steps, the government aims to rebuild trust in SACCOs, ensuring that members’ savings are protected and that co-operative institutions remain reliable pillars of financial inclusion in Kenya,” he assured.
