NAIROBI, Kenya, Feb 28 – Saccos across the country are feeling the heat following a multi-billion fraud scandal implicating the Kenya Union of Savings and Credit Co-operatives (KUSCCO).
This follows a directive from the government requiring Saccos to cover losses in the face of the scandal that has rocked KUSCCO through scaling of dividend payouts and setting aside funds to cushion the losses.
A forensic audit by PWC had earlier uncovered widespread fraud that has led to losses amounting to over Sh12 billion through document forgery and financial misstatements.
This has left many Sacco societies grappling with substantial financial losses, as several entities are forced to write off their investments in the now-collapsed cooperative body.
These write-offs have created a ripple effect across the industry, shaking the confidence of Sacco members and challenging the stability of cooperative societies across Kenya.
Mhasibu Regulated DT Savings and Credit Co-operative Society, for example, in its 2024 annual financial report, wrote off a Sh13 million investment in KUSCCO shares.
Likewise, LSK Sacco has also been affected by KUSCCO’s financial mismanagement. It reported that while it had maintained a relatively low investment in KUSCCO, amounting to Sh61.4 million, the scandal has still resulted in significant losses.
Despite receiving Sh42.1 million of the owed funds, it is still waiting for Sh19.2 million, with KUSCCO failing to honor its obligations.
“We have taken all necessary legal steps to recover the remaining balance, and while it has not significantly impacted our liquidity or financial position, we are deeply concerned by the widespread implications for our industry,” said Samuel Ogosi, CEO of LSK Sacco.
Similarly, Kimisitu Sacco and Stima SACCO disclosed a massive write-off of Sh353.95 million and Sh108 million, respectively, further highlighting the depth of the losses that have affected Sacco societies nationwide.
This substantial loss has caused a ripple effect, raising concerns about the potential for even greater losses across the sector.
Earlier, a forensic audit conducted at the behest of the government revealed 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.
