At least 58 savings and credit cooperatives (SACCOs) across the country are at risk of losing their assets through auction after defaulting loans amounting to Ksh1.36 billion.
The loans, which were borrowed from Kenya Union of Savings and Credit Co-operatives (Kuscco), were sought against deposits which only amount to Ksh368.39 million, leaving a shortfall of around Ksh987.86 million.
As a result, demand letters have been issued to the defaulting SACCOs, requiring them to settle their debts or submit a repayment plan within 14 days.
According to the demand letter, failure to comply would result in asset auctions and the freezing of the SACCOs' accounts.
Among the top defaulters, according to a report by Business Daily, are several renowned SACCOs, with one cooperative having a debt of Ksh377.5 million. Smaller SACCOs from Lamu, Migori and Malindi have also appeared on the defaulters' list.
The debt crisis has been linked to the collapse of KUSSCO, which has recently been investigated for alleged financial irregularities and fraud believed to amount to between Ksh12 billion and Ksh13 billion.
A forensic audit conducted by PricewaterhouseCoopers (PwC) revealed significant financial misconduct at KUSCCO where high-ranking executives illicitly forged the signature of a deceased auditor to authorise manipulated financial statements, effectively jeopardising Ksh13.3 billion in Sacco deposits.
In March, the Sacco Societies Regulatory Authority (SASRA) blamed legal and policy lacunas for the billions in losses at KUSSCO.
The regulator claimed its members have lost Ksh14 billion, which could have been stopped nearly three years ago. The body says that disparities in policy and the slow pace of developing new policies created a loophole for KUSCCO to continue operating, a factor that has resulted in the loss of 10 per cent of core capital in at least 201 Saccos in the country.
Months after the audit, in May 2025, KUSSCO began the auction of properties, including plots, houses and commercial buildings, which had been pledged as collateral by the defaulting SACCOs.
This auction process forms part of a wider recovery plan, which is supported by the government as it seeks to compensate SACCOs which lost funds to the KUSSCO scandal.
The KUSSCO scandal was so explosive that the government in May announced the inauguration of two critical frameworks in a bid to strengthen the governance of SACCOs.
Cabinet Secretary for the Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development, Wycliffe Oparanya constituted a five-member Committee of Experts which will be primarily tasked with reviewing the SACCO Societies Act of 2008, which the government feels is now outdated.
