Government takes over KUSCCO lending unit to recover lost Sacco billions

Published By The Statesman For The Statesman Digital
3 hours ago

The government has taken control of the lending unit of the Kenya Union of Savings and Credit Cooperatives (KUSCCO) to recover lost funds and strengthen the cooperative sector.

This move follows a comprehensive forensic audit by PricewaterhouseCoopers (PwC) that uncovered gross errors in KUSCCO’s financial dealings leading to a loss of over Sh 12 billion.

This includes non-performing loans totaling Sh3.7 billion, overstated profits of nearly Sh798 million over the last six years, irregular commissions amounting to Sh2.7 billion, and mismanagement of the central finance fund to the tune of Sh1.3 billion.

Cabinet Secretary for the Ministry of Cooperatives and MSMEs Development Wycliffe Oparanya in a statement assured the public of the government’s commitment to resolving the financial irregularities and restoring confidence in the cooperative movement.

“We are confident that all those who were involved in any irregularities at KUSCCO will face the full force of the law,” Oparanya stated.

The Ministry’s actions come following the handover of the PwC audit report to Inspector General of Police Douglas Kanja.

The report highlighted several discrepancies, including financial mismanagement, leading to substantial losses.

In response, the government is pursuing legal and administrative actions, as well as litigation, aimed at holding those responsible accountable.

KUSCCO, a key player in Kenya’s cooperative sector, which has seen member savings exceed Sh1 trillion, plays a critical role in providing financial services to millions of Kenyans.

The government’s recovery efforts include the restructuring of KUSCCO’s governance and the formation of a new nine-member board tasked with revitalizing the organization.

According to Oparanya,the new board will oversee the recovery strategy for the union, ensuring that SACCOs remain secure and viable investment vehicles.

In addition to restructuring KUSCCO, the government has introduced reforms to modernize the regulatory framework for SACCOs.

These include the establishment of a SACCO Shared Services Framework and a Central Liquidity Facility to improve the sector’s financial operations.

Likewise, the government has redefined the role of the Central Finance Fund (CFF), now known as the SACCO Liquidity Fund (SLF), which will operate independently under the regulatory oversight of SASRA.

These steps, alongside the launch of the Ministry’s Strategic Plan, are part of the government’s broader effort to protect SACCO deposits and minimize the need for future government bailouts.

The reforms aim to strengthen the cooperative financial sector, ensuring it remains a key tool for economic empowerment at the grassroots level.