- KUSCCO shareholders have approved the union’s dissolution as debts far outweigh its assets.
- Members have backed a new umbrella body, KEFESCO, focused on advocacy, training, research and consultancy.
- A creditor has moved to court to challenge the transition, putting the new federation’s future in question.
Shareholders of the Kenya Union of Savings and Credit Cooperatives (KUSCCO) Limited have voted to dissolve the union through a structured liquidation process.
The historic decision follows a severe financial crisis that left the organisation completely unable to meet its massive debts.
The final resolution was officially adopted during a tense Special General Meeting held on Friday, August 28, 2026, at the All Saints’ Cathedral in Nairobi. The urgent meeting was called by the Commissioner for Co-operative Development, David Obonyo, to address the union’s deep financial and governance troubles that took place between 2013 to 2024.
The final decision to wind up operations came after a stark review of KUSCCO’s balance sheet revealed an insurmountable debt load.
Shareholders learned that the union holds an asset base of approximately Ksh 5.4 billion, but faces crushing liabilities exceeding Ksh 17 billion.
This leaves the organisation with a financial shortfall of more than Ksh 11.6 billion. Following intense deliberations, the members resolved that an orderly, legally guided winding up process was the only viable path forward to safeguard the remaining property and protect the interests of member Saccos, depositors, and other key stakeholders.
The Commissioner for Co-operative Development has been officially mandated by the shareholders to oversee this entire shutdown process.
Under this regulatory authority, the office will secure and sell off KUSCCO’s remaining physical and financial assets, settle outstanding debts, cover liquidation expenses, and facilitate the fair and equitable distribution of any remaining money according to Kenyan cooperative laws.
While KUSCCO’s financial operations are coming to an end, shareholders heavily endorsed a parallel plan to maintain the development of Kenya’s vibrant cooperative sector.
READ:
They approved the immediate creation of a brand new national umbrella body, to be known as the Kenya Federation of Savings and Credit Cooperatives (KEFESCO) Limited. Unlike its predecessor, KEFESCO will focus strictly on non-financial support pillars to rebuild sector trust. Its core responsibilities will include national advocacy, training and education for staff, sector research, and consultancy services.
A specialised transition team made up of seven cooperative leaders will work directly with the government to guide the formation and legal setup of this new body.
State Department of Cooperatives Principal Secretary, Patrick Kilemi, highly praised the delegates for making the difficult decision to shut down the troubled union.
He commended the KUSCCO board and the leaders in attendance for having the courage to confront the past and the wisdom to forge a new pathway where trust can be restored to millions of cooperative members across the country. Commissioner David Obonyo echoed these sentiments, urging cooperatives across Kenya to unite under the new federation and promising full state support during the legal transition.
Creditors move to block the transition
The dissolution vote has not gone unchallenged. RUPSA Regulated NWDT SACCO Society Limited, one of KUSCCO’s creditors, has filed an urgent application at the Milimani Commercial and Tax Division of the High Court, seeking to stop the restructuring plan before it takes hold.
At the centre of the dispute is a preservation order the court issued on March 25, barring KUSCCO from disposing of its assets while an insolvency petition against it runs its course.
RUPSA’s advocates, led by Allan Mulama Advocates, argue that shifting KUSCCO’s membership base, business relationships, and goodwill into KEFESCO would effectively strip away the very assets the order was meant to protect. Doing so, they say, would undermine a Ksh6.1 billion claim still pending before the court.
READ ALSO:
The numbers behind that claim are steep. Court filings show KUSCCO owes 177 creditor Saccos a combined Ksh6,166,460,317. RUPSA further accuses the union of ignoring a Ksh108.8 million court decree issued in its favour on April 29, 2025.
Beyond the debt figures, RUPSA has also questioned KUSCCO’s spending choices. Its petition flags the union’s alleged sponsorship of the SACCA Congress 2026, set for October 11 to 16 in Dar es Salaam, Tanzania, and asks why funds are going toward an international conference when major creditors remain unpaid.
RUPSA now wants the court to rule on three fronts: to decide a pending preliminary objection from KUSCCO, to determine whether last Friday’s Special General Meeting and the formation of KEFESCO breach the March preservation order, and to bar KUSCCO from transferring its membership base or assets to any new entity until the insolvency case is resolved.
The High Court’s decision on these questions will likely shape whether KEFESCO can proceed as planned, or whether the creditors succeed in freezing the transition altogether.
By Obegi Malack and Benedict Aoya
Get more stories from our website: Sacco Review.
For comments and clarifications, write to: Saccoreview@
Kindly follow us via our social media pages on Facebook: Sacco Review Newspaper for timely updates
Stay ahead of the pack! Grab the latest Sacco Review newspaper!
