The Sacco Societies Regulatory Authority (SASRA) has said that savings and credit cooperatives (Saccos) affected by the Kenya Union of Savings and Credit Co-operatives (KUSCCO) scandal will not recover all their lost funds.
This comes months after the Ministry of Cooperatives disbanded KUSCCO’s board following an audit that uncovered widespread financial mismanagement, including falsification of records.
SASRA CEO Peter Njuguna said Tuesday night that the losses were too significant for full recovery, even with asset sales.
“They can recover something but not 100 per cent. I don’t think that will be possible because we are talking about billions here. The assets that are being talked about is Sh5 billion, so that tells you, Njuguna says.
He added, “Those assets… where would they invest to earn enough? I think they will recover something else but not everything.”
Njuguna noted that KUSCCO was originally established to advocate, train, and lobby for Saccos, but its expansion into financial services was a misstep.
“KUSCCO is very key and remember it was founded as an advocacy body to do training and lobby for their members. Its venture into financial services is where it failed, it should not have happened,” he said.
KUSCCO formed in 1973 as an umbrella body for Saccos, later expanded into deposit-taking operations.
The Ministry of Cooperatives appointed audit firm Grant Thornton to examine Kuscco’s financial affairs. Then-Cooperatives Cabinet Secretary Simon Chelugui said the audit revealed irregular withdrawals totaling Sh5.46 billion between February 2013 and April 2024.
As a result, Saccos and their depositors face major financial losses. Among the hardest hit are Mhasibu Sacco, which stands to lose over Sh480 million; Kimisitu Sacco, which could lose more than Sh353 million; and the Law Society of Kenya Sacco, which expects to lose at least Sh19 million despite efforts to terminate its investments with KUSCCO.
One Sacco has sued SASRA over its directive requiring KUSCCO-affiliated Saccos to absorb financial losses caused by mismanagement at the umbrella body.
