Several Savings and Credit Cooperative Organizations (SACCOs) under the Kenya Union of Savings & Credit Co-operatives (KUSCCO) are set to lose billions of Shillings following the illegal withdrawal of billions at the union.
An internal audit in November 2024 revealed that KUSCCO had lost at least Ksh12.5 billion due to illegal withdrawals and widespread mismanagement, which has led to several arrests and placed a financial loss on member Saccos.
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Depositors are now staring at significant losses of their hard-earned cash deposited in KUSCCO.
According to recently released financial results, Mhasibu SACCO is set to lose over Ksh480.6 million due to KUSCCO’s inability to honor a matured fixed deposit withdrawal request.
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The Sacco indicates that the amount related to a fixed deposit was held at KUSCCO and matured on January 16, 2024, but the union could not honor the withdrawal request.
Saccos at risk of losing millions in investments
Members of Kimisitu SACCO, on the other hand, will lose over Ksh353.95 million.
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The Law Society of Kenya SACCO members have also not been spared either, with the Sacco expected to lose at least Ksh19 million in investments despite their efforts to terminate their investment with KUSCCO.
Also Read: KUSCCO Starts Auctioning Assets, Proposal to Toll All Highways & Safaricom’s New MMF
The Sacco received a payment of Ksh42.18 million, leaving a balance of Ksh19.25 million that the union failed to honor.
This trend has now forced the management of Stima Deposit Taking Sacco to write off their Ksh108 million deposit at KUSCCO with a similar move coming from Balozi SACCO Society which has written of Ksh437.5 million investment in the union.
Additionally, KENPIPE SACCO reported Ksh149,180,285 fixed deposit with KUSCCO and Ksh698,113 held under the union’s Jungu Kuu savings.
AMREF SACCO reported a Ksh90 million investment at the union while Qona (former Safaricom SACCO) indicated it has Ksh134.7 million in KUSCCO, Ksh104 million being interest earning deposits and Ksh30.7 million being shares.
Earlier in the week, Business Daily reported that the government directed 247 Saccos to reduce dividend payouts and set aside funds to cover potential losses linked to the multi-billion-shilling KUSCCO fraud.
The directive is a setback for members of the societies, who have enjoyed annual dividends of between 8.22 percent and 10.22 percent over the past five years, even during the Covid-19 crisis.
Several leading saccos, including Mwalimu Sacco listed the write-off of KUSCCO investments as an agenda item for member voting.
Govt reacts to mismanagement at KUSCCO
Other affected Saccos that had invested millions in KUSCCO include Tembo SACCO, and Tower SACCO which has reclassified a Ksh112.4 million fixed deposit from the union into a receivable which has not been fully written off.
IG SACCO on its part has booked a Ksh588.7 million impairment charge related to its investment at the union.
State Department for Cooperatives Principal Secretary Patrick Kilemi said that the government will make sweeping changes to the SACCO Societies Regulatory Authority (SASRA) to ensure members’ deposits are safeguarded in what appears to be a significant case of oversight negligence.
He said that he will oversee restructuring both at SASRA and KUSCCO to curb a similar occurrence.
“We are recommending we are amending the SASRA Act of 2008 to ensure that anybody who is taking deposit is regulated by SASRA we are going to look at the setup of SASRA is SASRA operating optimally that SASRA has the capacity to regulate the kind of the 4,000 or so SACCOs we have? the answer is no,” he said.
“Our mantra has been a shilling in a circle should be as a safe as a shilling in the bank then if that’s what we want then we should be able to do the things banks are doing. We should be able to do the things Central Bank is doing the banks.”
Also Read: Govt Publishes List of 345 Licensed and Authorized SACCOs in 2025
The reassurance by the government to SACCO members is that in the end, they will receive their deposit and that lessons from KUSCCO have been learned.
However, the question that lingers in the mind of depositors is whether something could have been done to mitigate against these losses.
Auction
Data from 2023 ranks the top five deposit-taking saccos by assets: Mwalimu National Sacco (Ksh66.43 billion), Stima Sacco (Ksh59.15 billion), Kenya National Police Sacco (Ksh54.24 billion), Harambee Sacco (Ksh38.57 billion), and Tower Sacco (Ksh23.23 billion).
The new developments come after KUSCCO started auctioning multimillion properties of members as it grapples with the loss of funds due to the alleged mismanagement.
The Union’s interim management in an advertisement on February 21 announced that it has started auctioning houses and land of members who defaulted on mortgages as it attempts to cut losses occasioned by the alleged mismanagement.
KUSCCO listed individual clients whose properties ranging from plots, unfinished buildings, apartments, and motor vehicle workshops are set for auctioning.
The auction is set to be held at least 14 days after the day of notice.
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