What was once presented as a profitable SACCO union has now been unmasked as a troubled institution, after auditors uncovered a Sh12 billion deficit at KUSCCO that had built up over several years.
Cabinet Secretary for Co-operatives and MSMEs Development Wycliffe Oparanya told the Senate Committee on Trade, Industrialisation and Tourism that the shocking financial gap emerged following a forensic audit and reconstruction of accounts done by PwC between August and November 2024.
He explained that the Kenya Union of Savings and Credit Cooperatives (KUSCCO), which serves more than 3,000 SACCOs across the country, manages an estimated share capital of Sh3 billion and holds deposits and savings amounting to about Sh15.6 billion. Despite this strong base, he said the institution had suffered long-standing governance and financial control weaknesses.
“A forensic audit and subsequent reconstruction of accounts revealed that while the Union had been reporting profits, it was in fact incurring substantial losses, culminating in an estimated financial deficit of approximately Sh12 billion,” Oparanya told senators on Tuesday.
He warned that the crisis had already started affecting SACCO operations, especially liquidity levels, while also weakening trust in the wider cooperative movement.
“This situation has had a direct and adverse impact on the liquidity position and confidence of member SACCOs, thereby posing a systemic risk to the broader cooperative movement in Kenya,” he added.
The CS further informed the committee that the audit findings had been handed over to the Inspector General of Police as part of ongoing multi-agency investigations aimed at establishing how the losses occurred and who may be responsible.
He said the ministry had already rolled out a series of recovery and stabilisation measures, including forensic reviews, restructuring of operations, debt recovery efforts and legal action against individuals implicated in the audit.
“Regulatory intervention by the Commissioner for Cooperative Development became necessary, alongside the implementation of a comprehensive recovery and restructuring programme,” Oparanya said.
Senators were also told that recovery efforts have so far yielded Sh369 million, which has been refunded to SACCOs and members during the 2024–2025 period through auctions, sale of assets, vehicle disposals and debt collection initiatives.
However, Oparanya admitted that major hurdles still remain, including the large historical deficit, ongoing court cases, delayed recoveries and a Sh1.2 billion tax dispute with the Kenya Revenue Authority.
“We reaffirm our commitment to full recovery, accountability, and transparency,” he assured the committee.
He also updated lawmakers on investigations into Metropolitan Sacco Society Limited, saying the Directorate of Criminal Investigations is still handling the matter alongside court and administrative processes.
“The recovery process remains ongoing, with parallel administrative, judicial and investigative mechanisms being pursued to ensure accountability and restitution of the misappropriated funds,” he stated.
Beyond recovery efforts, Oparanya said the government is pushing wider reforms in the SACCO sector aimed at improving governance, strengthening oversight, protecting members’ savings and restoring confidence in cooperatives.
“The reforms are intended to build a stronger, safer, better governed and more competitive cooperative sector that protects members and contributes to Kenya’s socio economic transformation,” he said.
Senators, led by Issa Boy Juma, called for faster passage of the Cooperative Bill currently before the House, saying it would tighten regulation and close loopholes that have contributed to financial failures in the sector.
They also pushed for the formation of a mediation framework to help fast-track consensus and speed up reforms, warning that delays continue to expose SACCOs to further risks.