The Kenyan government has cancelled the registration of the Kenya Union of Savings and Credit Co-operative Societies (Kuscco) and ordered the 53-year-old apex into liquidation.
The organisation had been struggling for several years with mounting debts and accusations of mismanagement, prompting legal action after members were left facing billions in losses.
In a Kenya Gazette Notice No. 13907, dated 31 August, the commissioner for co-operative development, David Obonyo, said Kuscco had failed to achieve its objectives due to liquidity challenges, following a resolution by its members to have the union dissolved.
The liquidators have been authorised to take custody of all Kuscco’s properties, books, and other documents necessary to facilitate the liquidation process.
Under the Co-operative Societies Act, any aggrieved person has 30 days to appeal against the move.
The liquidation follows a special general meeting in Nairobi, where shareholders representing affiliated savings and credit co-operative societies (saccos) voted to dissolve the apex in a bid to prevent further losses of members’ savings and assets.
Kuscco was launched in 1973 to promote financial stability among saccos, by lobbying for their interests, and providing financial and advisory support.
A significant player in the co-op sector, its leadership included group national chair George Magutu, who has previously served on the global board of the International Cooperative Alliance and as vice-president of ICA-Africa. Kuscco was a nominee for this year’s ICA Africa Cooperative Excellence Awards 2026 for its historical role in financial inclusion.
Related: Nepal’s co-op fraud victims stage protests in Kathmandu
It has also been a close partner of the World Council of Credit Unions (Woccu), working together on sacco digitisation projects and the USAID-backed Kilimo loan product for rural farming and dairy co-ops.
But in recent years there has been growing alarm over the state of its governance and finances.
The troubles at the apex began in 2023, when inspectors found that its loan book had been overstated by more than Ksh 7.6bn (£43.5m, US$58.7m). Subsequent audits by Grant Thornton and PwC uncovered what court records describe as systematic deficiencies in the management of resources and unreliable financial records, with allegations of illicit loans and irregular book-keeping.
Capital FM Africa reports that PwC uncovered an estimated financial hole at Kuscco of between Sh12bn and Sh13.3bn (£76m, US$58.7bn) The losses were linked to ghost loans, falsified commissions and what the audit described as executive mismanagement.
The crisis has prompted anger from shareholders represented by the apex’s 250 affiliated saccos, who have also accused the government of failing to act decisively to ensure good governance or to recover their money.
The losses forced several saccos to write off millions of shillings invested in the apex: these include Stima DT, which wrote off Sh108m (£617,000, US$835,000), Balozi, Sh437.5m (£2.5m, US$3.4m) and Afa, Sh361.6m (£2m, US$2.8m).
In 2024, the government dissolved the Kuscco board, appointing an interim board headed by the Kenya Police Sacco chair, David Mategwa, to oversee the transition and recover members’ savings.
But auditors and lawyers said the apex would need about Sh14bn to restore its operations, against liabilities estimated at Sh17bn and an asset base of Sh5.4bn.
By last month, it was facing 291 court cases, and a progress report presented to shareholders indicated that the board had recovered only Sh77m from debtors between 2024 and 2026.
During a Special AGM last week, shareholders agreed to establish and register a replacement apex, the Kenya Federation of Savings and Credit Co-operatives (KEFESCCO).
Ministers are now bringing in a Cooperative Societies Bill to strengthen governance, accountability and sustainability in the co-operative sector.
“As we move closer to the enactment of the bill, the ministry will convene a series of engagements with co-operative leaders across the country to apprise them of the reforms and prepare the sector for effective implementation,” said co-operatives minister Wycliffe Oparanya.
