NAIROBI, Kenya – The government has directed 247 savings and credit cooperative societies (saccos) to scale down dividend payouts and set aside funds to absorb potential losses linked to the massive financial scandal at the Kenya Union of Savings & Credit Co-operatives (KUSCCO).
The directive, issued by the State Department for Cooperatives, aims to shield saccos from liquidity crises following revelations of a Sh13.3 billion fraud that has left KUSCCO insolvent by Sh12.5 billion.
The affected saccos had collectively deposited Sh24.8 billion with the cooperative umbrella body, funds that are now at risk.
The order comes just as saccos prepare for their annual general meetings, where members typically approve dividend payments and financial provisions.
Instead of rewarding members with the usual hefty payouts—historically ranging between 8.22 percent and 10.22 percent annually—the institutions have been told to prioritize financial stability.
“We are telling them that instead of distributing all profits to members, they should set aside a portion as a provision,” said Commissioner for Co-operatives Development David in an interview.
Several prominent saccos, including Mwalimu Sacco, Harambee Sacco, and Mhasibu Sacco, have listed the write-off of KUSCCO investments as a key agenda item in their upcoming AGMs.
A forensic audit by consultancy firm PricewaterhouseCoopers (PwC) uncovered deep-rooted financial malpractice at KUSCCO, including fraudulent bookkeeping, executive theft, unauthorized bank withdrawals, bribery, and conflicts of interest in awarding contracts.
Manipulated financial records helped conceal the irregularities, creating a false impression of profitability.
The scandal has shaken confidence in Kenya’s cooperative movement, with the government now facing pressure to restore stability in the sector.
While some saccos have been advised to stagger their financial provisions over several years, others may need to seek bank loans to cushion against potential liquidity shortfalls.
Authorities have withheld the names of the affected saccos, fearing that public disclosure could trigger panic withdrawals and destabilize the institutions further.
