Annual Ksh3 billion SACCO losses raise alarm over weak oversight

The cooperative finance sector in Kenya is under growing scrutiny as fresh revelations expose extensive financial mismanagement and fraud across savings and credit cooperatives (SACCOs), with annual losses exceeding Ksh3 billion.

According to the Sacco Societies Regulatory Authority (SASRA), these massive losses are attributed to poor governance, unremitted member contributions, liquidity challenges and a widespread failure to adhere to financial compliance standards. These systemic weaknesses are increasingly putting members’ savings at risk and undermining confidence in the SACCO model.

The alarm was raised during a SACCO empowerment forum convened in Nairobi by NCBA Group, bringing together key industry stakeholders. Commissioner for Cooperatives at the State Department of Cooperatives, David Obonyo, expressed concern over the deepening challenges that are limiting loan access and weakening the sector’s growth potential.

Obonyo called for urgent reforms to enhance transparency and build resilience within the SACCO ecosystem. “As a ministry, we are working closely with financial institutions such as NCBA to develop a cooperative sector that is transparent, innovative, and sustainable,” he stated.

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He stressed that the future of SACCOs lies in adopting digital technologies, reinforcing governance and improving access to financing

Experts at the forum discussed measures to improve board governance, strengthen cyber security and integrate innovation into SACCO operations to ensure long term sustainability.

NCBA Group Managing Director John Gachora underscored the importance of SACCOs in expanding financial access, noting that the sector serves over six million Kenyans and manages assets worth more than Ksh1 trillion. He highlighted the need for SACCOs to modernize their systems and create member-focused services to thrive in the current economic environment.

“SACCOs are critical to financial inclusion in Kenya,” said Gachora. “But their sustainability hinges on how well they manage internal processes and embrace technological transformation.”

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The discussions came on the heels of a shocking forensic audit conducted by PricewaterhouseCoopers (PwC) into the Kenya Union of Savings and Credit Cooperatives (KUSCCO). The audit painted a bleak picture of financial impropriety, revealing that KUSCCO is technically insolvent, with liabilities exceeding its assets by over Ksh12.5 billion.

Even more alarming, the audit report revealed a loss of Sh13.8 billion, attributed to unchecked fraud, poor oversight and prolonged financial abuse within the union.

These findings have intensified calls for immediate reforms in SACCO oversight and risk management, with stakeholders urging government intervention to protect member savings and restore public trust in the cooperative movement.

By Benedict Aoya

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