Nairobi: Shareholders of the financially distressed Kenya Union of Savings and Credit Co-operative Organisations (KUSCCO) have unanimously approved the liquidation of the union, emphasizing that the move is necessary to safeguard their remaining assets and prevent further losses.
According to Kenya News Agency, the decision was reached during a special general meeting convened by Commissioner for Co-operatives David Obonyo in Nairobi to brief shareholders on the financial position of the union and chart the way forward. The meeting was also attended by Cooperative Principal Secretary Patrick Kilemi, who commended the courage displayed by the KUSCCO board and leaders in attendance for addressing past challenges and creating a future pathway for the movement.
Representatives from about 250 affiliated Savings and Credit Co-operative Organisations (SACCOs) attended the meeting, which was marked by heated exchanges. Members accused the government of inaction regarding resource recovery allegedly lost due to mismanagement. However, Commissioner Obonyo defended the government’s efforts, citing actions taken against the previous KUSCCO leadership, including the dissolution of the board and arraignment of former officials.
Obonyo highlighted the union’s insolvency and inability to meet financial obligations, underlining the necessity of liquidation to protect shareholders’ assets. He noted that attempts to recover lost funds had been challenging, making liquidation essential to prevent further asset loss.
An audit by Grant Thornton, appointed by the government to examine KUSCCO’s financial affairs, revealed the union’s insolvency and significant financial difficulties. The audit indicated that KUSCCO requires approximately Sh14 billion to restore operations, facing liabilities of Sh17 billion against an asset base of Sh5.4 billion. The report also noted the absence of an asset register and insufficient support for the loan book.
KUSCCO Board Chairman David Mategwa stated that current directors had endeavored to revive the union but faced numerous legal challenges from SACCOs seeking repayment of their deposits. Mategwa stressed the need for sobriety in executing new measures to ensure every shareholder benefits.
The union’s legal team, led by Miller and Company Advocates managing partner Cecil Miller, reported that KUSCCO is confronting nearly 300 court cases filed by SACCOs demanding repayment of more than Sh16 billion invested in the union over the years. Miller emphasized the difficulty posed by ongoing litigation in recovering debts from SACCOs and individuals.
The executive progress report of the union showed that between 2024 and 2026, the board had managed to recover only Sh77 million from debtors. Hazina SACCO Chairman Evans Kibagendi proposed arbitration to establish and record the debts owed to the union. However, Miller opposed the idea, cautioning that arbitration could complicate matters and expose the union to further litigation risks.
George Weru, a financial services leader at PricewaterhouseCoopers, described KUSCCO as a distressed institution plagued by significant mismanagement of shareholders’ resources. He stressed the need for government intervention to expedite an orderly restructuring and winding-up process, ensuring a fair distribution of remaining assets and debt payment.
Senior audit manager at Mwangi and Kamwara Associates LLP, Andrew Mulogoli, highlighted the extent of resource mismanagement, which has hindered KUSCCO’s operational efficiency. He pointed out negative growth in key business segments, noting negative retained earnings of Sh16.8 billion and unsupported recorded expenses of Sh13 billion.
The union’s board had previously been dissolved by former Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Simon Chelugui as part of efforts to address the crisis. During the meeting, shareholders agreed to form and register the Kenya Federation of Savings and Credit Co-operatives (KEFESCCO). However, the Commissioner rejected a proposal to transform KUSCCO into a new institution, arguing that the union had lost the confidence of cooperators.
The Commissioner stated that the proposed winding-up process would address the union’s outstanding obligations and determine how the remaining assets could be distributed among legitimate claimants.
