NAIROBI, Kenya May 13 – Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya has revealed that the Kenya Union of Savings and Credit Co-operatives (KUSCCO) is facing an estimated Sh12 billion financial crisis following years of financial mismanagement and governance failures.
Appearing before the Senate Committee on Trade, Industrialization and Tourism, the CS said a forensic audit uncovered massive losses despite the Union previously reporting profits.
“A forensic audit and subsequent reconstruction of accounts revealed that while the Union had been reporting profits, it was in fact incurring substantial losses, culminating in an estimated financial deficit of approximately Sh12 billion,” Oparanya told Senators.
The CS warned that the crisis had negatively affected member SACCOs and posed a threat to confidence in the wider cooperative movement.
“This situation has had a direct and adverse impact on the liquidity position and confidence of member SACCOs, thereby posing a systemic risk to the broader cooperative movement in Kenya,” he said.
The committee chaired by Issa Juma Boy was informed that KUSCCO currently serves more than 3,000 SACCOs countrywide, with an estimated share capital of Sh3 billion and deposits and savings amounting to about Sh15.6 billion.
According to the CS, a forensic audit conducted by PwC between August and November 2024 established the Sh12 billion financial gap, with the findings submitted to the Inspector General of Police to support multi-agency investigations.
Oparanya said the Ministry has since initiated a raft of corrective measures, including forensic audits, debt recovery, restructuring of operations and legal action against individuals adversely mentioned in the report.
“Regulatory intervention by the Commissioner for Cooperative Development became necessary, alongside the implementation of a comprehensive recovery and restructuring programme,” he added.
Senators heard that more than Sh369 million has so far been refunded to SACCOs and members during the 2024/2025 period, while additional recoveries have been made through property auctions, vehicle sales and debt collection efforts.
However, the CS noted that major challenges remain, including ongoing court battles, delayed recoveries and a Sh1.2 billion tax dispute with the Kenya Revenue Authority.
“We reaffirm our commitment to full recovery, accountability and transparency,” Oparanya assured the committee.
On the recovery of funds misappropriated at Metropolitan Sacco Society Limited, the CS said investigations are still ongoing at the Directorate of Criminal Investigations (DCI), alongside administrative and judicial processes.
“The recovery process remains ongoing, with parallel administrative, judicial and investigative mechanisms being pursued to ensure accountability and restitution of the misappropriated funds,” he said.
The committee was also told that the Ministry is pursuing comprehensive SACCO reforms aimed at strengthening governance, protecting members and improving competitiveness in the cooperative sector.
“The reforms are intended to build a stronger, safer, better governed and more competitive cooperative sector that protects members and contributes to Kenya’s socio-economic transformation,” Oparanya stated.
Senators further noted that fast-tracking the Cooperative Bill currently before the Senate will be key in enhancing oversight, accountability and governance within SACCOs and cooperative societies.
