Savings and credit cooperatives (Saccos) in Kenya are staring at massive financial losses following revelations of misappropriation at the Kenya Union of Savings and Credit Co-operatives (KUSCCO) Limited. A forensic audit conducted by PriceWaterHouseCoopers has exposed a staggering Ksh 13.7 billion misappropriated by top executives over a period of six years.
Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya has advised affected Saccos to amend their financial books to reflect the losses, as there is little hope of recovering the lost funds. The government has initiated discussions with banks to provide financial support to some of the struggling Saccos to cushion them from immediate collapse.
The forensic audit findings detail serious financial irregularities, including the mismanagement of non-performing loans amounting to Ksh 3.7 billion. Additionally, KUSCCO’s top management overstated profits by Ksh 797.9 million and irregularly paid commissions worth Ksh 2.7 billion. These economic offences have not only eroded the financial stability of KUSCCO but have also put thousands of Sacco members at risk of losing their savings and investments.
Following the damning report, Cabinet Secretary Oparanya has handed over the forensic audit findings to the National Police Service for further investigations and potential prosecution of those responsible. The move signals the government’s intention to hold accountable those implicated in the financial scandal.
To mitigate the financial crisis facing affected Saccos, cooperative leaders have been urged to spread their loss recovery efforts over multiple years. This approach is aimed at minimizing financial shocks and ensuring the continued stability of these institutions. Talks are ongoing with banks to explore possible bailouts for the most severely impacted Saccos.
In response to the scandal, regulatory changes have been instituted to limit KUSCCO’s mandate strictly to advocacy and capacity building. This restructuring is intended to prevent similar financial mismanagement in the future and restore confidence in the cooperative sector.
The unfolding crisis at KUSCCO serves as a cautionary tale for financial institutions and underscores the importance of transparency and stringent regulatory oversight in the cooperative movement. As investigations continue, Sacco members and stakeholders remain hopeful that accountability measures will be enforced to safeguard their hard-earned savings and investments.
