The country’s Saccos industry remains stable despite massive financial scandal that has rocked Kenya Union of Savings and Credit Co operatives (Kuscco) and triggering tensions among stakeholders.

Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Wycliff Oparanya said no depositor’s money at Kuscco would be lost. He assured saccos that measures have been put in place to ensure all the money in question, currently considered lost, is recovered in the short term.

 “No Sacco has lost its money, the money that had previously been deposited will be recovered, not today, not in the next two years, but we will recover all that,” he asserted while addressing the media in Mombasa.

As a result, Oparanya advised saccos to embrace provisioning as one of the strategies to cushion themselves at the moment then upon the recovery of the money, they will be able to write back the money to the shareholders.

He also dismissed claims that some saccos were considering winding down operations as a result, noting that in fact the amount that they had deposited could not have shaken them due to their strong financial positions. Oparanya noted that since June 2023 members’ savings in co-operatives alone have clocked the Sh1 trillion mark and is currently standing at approximately Sh1.047 trillion.

 “Since then, members have continued to defy economic shocks, a remarkable testament of the spirit of Kenya’s cooperative movement,” he said. As part of the reforms to counter the recent set back from repeating itself, the CS noted that the cabinet on Tuesday approved a raft of changes which include the implementation of a Sacco Shared Services Framework.

Central liquidity facility

Oparanya said the Central Liquidity Facility will enable Saccos to easily engage in transactions with each other, access short-term loans, and participate in the National Payment System. Additionally, there will be a credit guarantee fund which is similar to the one applied by banks which will be stepping in, in the event of a financial crisis faced by a member.

“The government has therefore decided to appoint a Committee of Experts to review the Sacco Societies Act and Regulations. This will help in preventing the issues that we have faced with Kuscco in going forward,” he noted.

Among the reforms, the muscles of the apex body have been shrunk down to the initial mandate which is to provide oversite and advocacy for saccos since it appears that the exploitation of the gaps within the industry was a misstep.

Additional emphasis will also be directed on the Central Finance Fund (CFF) which previously operated under Kuscco. “We are pleased to inform you that Sacco Liquidity Fund (SLF), formerly referred to as Central Finance Fund (CFF), is being repositioned as a secondary cooperative under SASRA regulation, ensuring a clear separation from Kuscco’s core functions,” he stated.

According to Oparanya, SLF will operate under an independent board and CEO, effectively running the process of recovery and refund to the Saccos owed funds.

“Ladies and Gentlemen, these reforms and yesterday’s launch of the Ministry of Co-operative and MSMEs Development Strategic Plan will contribute to our citizens’ financial wellbeing. Our actions are aimed at ensuring better protection of Sacco deposits, minimising government bailout risks, and strengthening the cooperative financial sector.”

Smallholder depositors

The CS also revealed that a total of Sh136 million has been refunded to the smallholder depositors as a result of them selling unused 32 motor vehicles and tracing claims to the Kuscco houses investment.

Further, he acknowledged the impact of the forensic audit conducted by the PricewaterhouseCoopers (PwC) on stating that it served as an eye opener for what needs to be done to drive the industry forward.

“It’s against this background that the Government of Kenya through the ministry is directing the constitution of a new 9-member board with 3-year mandate to revive Kuscco and build the confidence of Saccos in Kenya as a secure investment vehicle at the grassroot,”

These reforms, according to Oparanya, will help streamline governance with the ability and speed needed in times like this.