Why State wants union characterised by gross mismanagement liquidated

Cooperatives CS Wycliffe Oparanya during the inauguration of the new KUSCCO board on May 12, 2025. [Wilberforce Okwiri, Standard]

The government has officially gazetted the bankruptcy of the 53-year-old Kenya Union of Savings and Credit Co-operative Limited (KUSCCO) days after it resolved to have the union liquidated.

This follows failure to revive it after continued gross mismanagement of assets and members' savings by the top echelons of the union.

In a special Kenya Gazette Notice No. 13907 dated Aug 31, 2026, the Commissioner for Co-operatives Development, David Obonyo, published a cancellation registration notice of the union, citing the institution's failure to meet its objects due to liquidity challenges. He also ordered the liquidation of the financially troubled union.

"Whereas the Kenya Union of Savings and Credit Co-operative Limited (KUSCCO) (CS/2171) has failed to achieve its objects due to liquidity challenges and whereas Kuscco members passed a resolution for Kuscco to be dissolved pursuant to section 61 of the co-operative societies Act (CSA) Cap 490, now therefore pursuant to section 62(1) (c), I cancel the registration of KUSCCO and order that it be liquidated," said Obonyo.

Through the Kenya Gazette, the commissioner appointed three senior co-operative officers to undertake liquidation of the union for a period not exceeding one year.

"And further, pursuant to Section 65 of CSA, the commissioner for c-operative do appoint CPA Peter Wanjohi Kiama, deputy commissioner for Cooperative Development, Habil Olembo Jesse, principal Co-operative officer and Mariam Adam Abubakar, deputy chief state counsel all from the state department for Co-operatives, liquidators for a period not exceeding one (1) year and authorize them to take into their custody all the properties of the said  union including such books and documents as it's deemed necessary for completion of the liquidation."

However, Section 62 (2) gives 3 days to any aggrieved person an opportunity to appeal to the Cabinet Secretary in charge of cooperatives or the High Court.

Known for lobbying and advocacy, contributing to the development of the cooperative movement in the country for many years, the liquidation feels like the end of an era. The top management of Kuscco has been globally recognised, with the office of the chief executive officer holding positions in some of the global cooperative organisations.

The decision was sealed last week during a special general meeting held in Nairobi, after Saccos affiliated to the debt-ridden institution passed a resolution to have it liquidated to prevent further loss of their hard-earned assets. Government representatives, auditors and legal experts confirmed their disappointment with the struggles to revive the institution.  The top management of

Placing the union under liquidation ends previous and current attempts by auctioneers to attach the properties in pursuit of the resources of their clients.

During the meeting, shareholders agreed to the formation and registration of Kenya Federation of Savings and Credit Co-operatives (KEFESCCO).

The meeting that had been convened to inform members of the current status of the union and chart the way forward was characterised by bitter exchanges between representatives of 250 affiliated Saccos and the commissioner.

Enraged members accused the government of complicity in the gross mismanagement of the union in addition to indecisiveness in helping recover looted resources. But Obonyo defended the government, saying it has enforced tough measures, including dissolving the previous board and prosecuting some of them in court.

Infuriated members demanded quick recovery of their resources, but Obonyo hastened to add:

“The institution is insolvent and cannot even meet its financial obligations. Therefore, it requires drastic measures to save shareholders' hard-earned assets. It has proved difficult to recover the lost money, and therefore we have to collectively agree on the best approach to ensure shareholders do not lose everything.”

The union board of directors was dissolved in May 2024 by the former Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Simon Chelugui. He appointed an interim board under the leadership of Kenya police Sacco national chairman David Mategwa to oversee the transition and help in recovering members’ savings. boa

Mategwa said he defended the government and the current directors, saying they have tirelessly employed strategies to resuscitate the union but have continued to receive numerous legal challenges.

“Some Saccos that have filed court cases over and above demanding refund of their savings also want the union assets attached and auctioned. There is a need for sobriety in executing new measures to ensure every shareholder has benefited,” said Mategwa.

Grant Thornton, a reputable auditing firm appointed by the government to conduct a thorough examination of the union's financial affairs, revealed that the institution is insolvent and facing grave financial trials.   “There is no asset register and a lack of support for the loan book,” an audit presented by Grant Thornton indicated.

The auditors and legal team confirmed that the union faces a daunting task of mobilising Sh14 billion to efficiently put it back on track against Sh17 billion liabilities and an asset base of Sh5.4 billion.

The union legal team led by Cecil Miller, the managing partner of Miller and Company Advocates, confirmed that the union is grappling with close to 300 court cases filed by Saccos demanding repayment of more than Sh16 billion they have invested over the years.

A presented union executive progress report stated that between 2024 and 2026, the union board has only managed to recover Sh77 million from the debtors.

“As at August 28, 2026, the union was expected to respond to 291 court cases with petitioners demanding speedy payment of their deposits and interest.  The numerous and continuing court cases have made it impossible for the current KUSCCO board, in conjunction with the legal team, to recover all the debts from Saccos and individuals,” said Miller at All Saints Cathedral during a day-long special general meeting. Hazina Sacco chairman Evans Kibagendi proposed that the Kuscco case be referred to an arbitrator, as the same will help in recording accrued debts.

Miller ruled out arbitration between the union and debtors, saying the same could complicate the current situation and create a leeway for the emergence of more tight court cases.

“If the Saccos continue filing more court cases, the union risks being taken over by the Cooperative Bank, which is the main lender, thus complicating shareholders' efforts to recover their assets. The only option remaining is for the Commissioner of Cooperatives to exercise his powers as stipulated in the Cooperative Societies Act to save the shareholders from total loss of their hard-earned resources,” he added.

George Weru, a partner and financial services leader with Price Waterhouse Coopers, described Kuscco as a distressed union characterised by gross mismanagement of shareholders' resources. “The current situation is dire and requires tough action. The only option remaining to save the union and shareholders from complete loss of their resources is for the Government to fast-track an orderly restructuring winding process to guarantee fair distribution of remaining assets and payment of debts,” said Weru during the highly charged meeting.

Senior audit manager with Mwangi and Kamwara Associates LLP, Andrew Mulogoli, said owing to the level of resource mismanagement, the institution cannot continue operating efficiently. “The union's key business segments have, over the years, continued to register negative growth.

For example, in the books of account, the union registered a negative growth of Sh16.8 billion in retained earnings, while there was no evidence to support the Sh13 billion recorded expenses,” said Mulogoli.