Kenya: KUSCCO to become federation in major SACCO sector reform

NAIROBI, July 17, 2026 — The Kenyan Government has announced plans to transform the Kenya Union of Savings and Credit Cooperatives [ KUSCCO ] into a federation, paving the way for far-reaching reforms in the SACCO sector.

The move forms part of the Ministry of Cooperatives and MSMEs Development’s long-term strategy to strengthen governance, accountability and oversight within the cooperative movement.

Cabinet Secretary for Co-operatives and MSMEs Development Wycliffe Oparanya announced the changes after meeting KUSCCO’s Board of Directors, revealing that the Ministry will also convene a meeting with SACCO leaders.

Speaking on Thursday, Oparanya said the engagement is intended to prepare the sector for the implementation of reforms under the proposed Cooperative Societies Bill.

“I visited KUSCCO, where I received a comprehensive briefing on the restructuring of the organisation to strengthen governance, improve operational efficiency and restore confidence in the co-operative movement,” he said.

“I was encouraged by the progress made in recovering assets to safeguard the interests of members, as well as the ongoing preparations to transition KUSCCO into a federation in line with the envisaged reforms,” Oparanya added.

Under the new structure, KUSCCO will cease its previous dual role as both a financial services provider and the umbrella body for SACCOs, and instead operate solely as a federation focused on promoting good governance and strengthening the SACCO movement.

On the proposed Cooperative Societies Bill, Oparanya said the legislation would enhance governance, accountability and sustainability across the co-operative sector once enacted.

“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 their effective implementation,” he stated.

The latest reforms come in the wake of the Ksh 13.3 billion KUSCCO scandal, which emerged last year and exposed widespread financial mismanagement at the umbrella body representing Kenya’s SACCOs.

The scandal placed billions of shillings in members’ savings and investments at risk, forcing many SACCOs to restate their financial statements after writing off unrecoverable investments.

Following an audit into the multi-billion-shilling scandal, the Ministry of Cooperatives assumed direct operational control of KUSCCO to oversee its restructuring and stabilise its operations.

https://thecooperator.news/cooperatives-emerge-as-engine-of-rural-industrialisation-in-kenya/

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