USAID freeze to hurt Kenya’s Coop sector

Ramifications of a move by Donald Trump’s administration to cut off financial assistance by the United States Agency for International Development (USAID) to developing countries including Kenya, will begin to be felt in the coming months.

To be hit hard are key sectors of the Kenyan Economy, including the Cooperative sector that has in the past benefitted vastly through funds pumped into the sector through many donor agencies, including World Credit Union Conference(WOCCU) and USAID-which have been dominant.

World Council of Credit Unions (WOCCU) is the apex association for credit unions and other global financial cooperatives

“There is going to be a big setback in research and development projects in Kenya’s Cooperative sector if WOCCU, which has been heavily funded by USAID, were to pull out. The Cooperative sector will also suffer when projects that were designed to improve on efficiency, fail to function due to lack of sponsorship by WOCCU, through USAID,” said Charles Kaba, Chief Executive Officer, Qwetu DT SACCO Limited.

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Huge job losses are expected in areas where USAID has been actively involved, including agriculture, health, education, and real estate sectors among others.

“There are thousands of people who have lost their jobs and livelihoods due to a cut in funding to various sectors by USAID. Nearly, all those who have lost their jobs are also members of a Cooperative and their loss will definitely affect remittances to SACCOs,” said Kaba.

USAID has been involved in many projects, especially in remote parts of the country, including regions that have been avoided by many international and local development partners and donors.

“Due to reduced remittances from USAID, we expect stagnated growth in many areas that were heavily reliant on the participation of USAID,” said Kaba.

With funding drying up for WOCCU, among the first places to feel the heat is participation of SACCOs in the National Payment System (NPS).

The involvement of SACCOs in the NPS would have enabled SACCOs to receive remittances directly from abroad, without passing through the mainstream commercial banks, as is the case at present.

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“The planned project involving SACCOs in the NPS may not materialize due to lack of funding from USAID and WOCCU,” said Kaba.

As a remedy to USAID AID cuts, Experts maintain that Kenya Cooperatives may have to relook at their budgets, so as to deal with the funding gaps.

Kenya’s Cooperative sector may also be forced to seek for other international development partners.

“The other option would be for SACCOs to consider mergers and acquisitions to ensure their survival in an increasing competitive business environment. There is no need of having hundreds of SACCOs that are mostly unviable. Instead, we have merged these SACCOs to two or three big ones per business segment, “said Kaba.

WOCCU plans to reduce its Global Programs’ Staff and this could affect its International Advocacy work and other member services.

This is due to the U.S. Department of State’s 90-day stop-work order on all USAID-funded international development projects.

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A statement from WOCCU insists that its International Advocacy work, nor its engagement, education and networking activities—including the 2025 World Credit Union Conference in Stockholm, Sweden, July 14-16, 2025, will not be impacted.

WOCCU was implementing three USAID-funded projects in seven countries when the stop-work order went into effect in late January.

These include the USAID Cooperative Development Program’s Accelerating Growth and Inclusion in Lending for Credit Unions in Burkina Faso, Guatemala, Kenya and Senegal. This project advanced the ability of credit unions to provide value to their members, create jobs and contribute to the economy through increased financing to entrepreneurs and small and medium enterprises (SMEs).

With less than $10 million in U.S. Government funds, WOCCU had leveraged $2 million in private sector funding and would unleash $142 million in additional investment (loans) through credit unions.

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WOCCU will have to reduce the staffing levels for its overseas’ project staff, while moving its U.S.-based project staff to part-time as it waits for the review process to conclude.

All WOCCU employees will be taking one unpaid furlough day per month and working collaboratively in an effort to sustain the important development work of the organization to the benefit of its member credit union organizations and partners in these countries.

“We are facing a tough moment, but we are committed to continue our development work. WOCCU’s Global Programs will pivot, rebuild and continue to do the things we believe in, because they are based on the proven model of cooperative finance that both uplifts communities and brings a solid return for our investors and funders, including in the U.S. We remain committed to the cooperative movement and its work around the globe to advance financial access through credit unions and deliver measurable, long-term benefits for the communities they serve,” said Elissa McCarter LaBorde, WOCCU President and CEO.
The World Council has implemented over 300 technical assistance programs in 90 countries. Worldwide, 74,634 credit unions in 104 countries serve 411 million people.

By Jackson Okoth

 

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