Ukaguzi Sacco faces Ksh 47.03 million in loan defaults

Ukaguzi Sacco is grappling with Ksh 47.03 million in loan defaults and uncertainty over the recovery of Ksh 50 million invested in Kenya Union of Savings and Credit Cooperatives (KUSCCO) Limited. This raises concerns over its credit risk management and investment exposure.

A report by the Sacco’s Supervisory Committee was presented to members during its 53rd General Meeting (SGM). It revealed that part of the outstanding loans had deteriorated into losses, while a significant portion remained in doubtful and overdue categories.

Of the Ksh 47.03 million in defaulted loans recorded by December 31, 2025, Ksh 3.27 million had been classified as losses after remaining unpaid for more than a year.

A further Ksh 13.95 million was categorised as doubtful or substandard, with repayments overdue by between 91 and 360 days. Meanwhile, Ksh 29.81 million had remained unpaid for between 31 and 90 days.

The committee singled out Ukash loans for their high default rates. It recommended stricter credit assessment procedures and tougher eligibility requirements to curb further losses.

Despite the repayment challenges, the Sacco’s loan portfolio expanded by 6.68 per cent to Ksh 3.02 billion in 2025, reflecting continued lending activity. Loans disbursed during the year also increased slightly to Ksh 1.69 billion, up from Ksh 1.68 billion in 2024.

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The report also highlighted uncertainty surrounding Ksh 50 million invested in KUSCCO in 2023. The Sacco received only Ksh 756,705 in 2025 as discussions with KUSCCO management over the outstanding amount continued.

The payment represented 1.43 per cent of the expected amount, underscoring the limited recovery recorded during the year.

Separately, Ukaguzi reported Ksh 98.85 million in unremitted member contributions, with employers yet to transfer the deductions to the Sacco by December 31, 2025.

The outstanding contributions present another financial concern. Delayed remittances can affect the timely crediting of members’ savings and the Sacco’s access to funds.

On the income side, the Sacco recorded operating income of Ksh 510.90 million, surpassing its budget of Ksh 388.45 million by 31.5 per cent. However, expenditure also exceeded projections, reaching Ksh 398.36 million against a budget of Ksh 375.37 million.

Membership grew to 2,455 in 2025, compared with 2,376 the previous year.

The Supervisory Committee called for stronger risk management and oversight. It also urged a review of the Sacco’s tax exposure, including potential liabilities arising from excise duty and withholding tax.

The findings point to a mixed financial picture for Ukaguzi. Growth in its loan portfolio, income and membership is accompanied by persistent loan defaults, outstanding employer remittances and uncertainty over the recovery of its KUSCCO investment.

By Lizzy Aluga

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