Over 50 SACCOs face auction over Ksh 1.36bln in unpaid KUSCCO loans
Demand letters have been issued to the defaulting SACCOs, requiring them to either settle the outstanding amounts or submit formal repayment plans within 14 days
NAIROBI, July 24, 2025 — At least 58 Savings and Credit Cooperatives [SACCOs] across Kenya are at risk of losing their assets through auction after defaulting on loans totaling Ksh 1.36 billion borrowed from the Kenya Union of Savings and Credit Cooperatives [ KUSCCO ], local reports indicate.
The defaulted loans were secured against member deposits amounting to only Ksh 368.39 million, leaving a significant shortfall of approximately Ksh 987.86 million.
Demand letters have been issued to the defaulting SACCOs, requiring them to either settle the outstanding amounts or submit formal repayment plans within 14 days. Failure to comply will result in the auctioning of assets and freezing of bank accounts, according to the letters.
Among the top defaulters, as reported by Business Daily, is a prominent SACCO owing Ksh 377.5 million. Smaller SACCOs from regions such as Lamu, Migori, and Malindi have also appeared on the defaulters’ list.
The ongoing debt crisis has been linked to the collapse of KUSCCO, which is under investigation over financial irregularities and alleged fraud estimated between Ksh 12 billion and Ksh 13 billion.
A forensic audit by PricewaterhouseCoopers [PwC] uncovered serious financial misconduct at KUSCCO, including the forgery of a deceased auditor’s signature to authorize falsified financial statements, jeopardising over Ksh 13.3 billion in SACCO deposits.
In March, the Sacco Societies Regulatory Authority [SASRA] attributed the massive losses to regulatory and legal loopholes that allowed KUSCCO to operate unchecked. SASRA revealed that SACCO members had collectively lost up to Ksh 14 billion, losses that could have been avoided if corrective action had been taken three years earlier. The regulator added that at least 201 SACCOs have suffered a 10 percent erosion of their core capital due to the KUSCCO fallout.
In May 2025, as part of a broader recovery plan, KUSCCO initiated the auction of collateralized properties, including land, homes, and commercial buildings, belonging to defaulting SACCOs. The government has backed the recovery process in an effort to reimburse affected SACCOs.
The magnitude of the scandal prompted swift policy action. In May, the government launched two key governance frameworks aimed at restoring public confidence and strengthening oversight in the cooperative sector.
Co-operatives and MSMEs Cabinet Secretary Wycliffe Oparanya also appointed a five-member Committee of Experts tasked with reviewing the SACCO Societies Act of 2008, which the government now deems outdated and inadequate for the current financial landscape.
https://thecooperator.news/nairobi-ready-to-host-10th-tcamcco-this-month/
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