KUSCCO has made the final journey in its corporate life and now lies buried. The epitaph on the tombstone reads something like this:
*** Here lies KUSCCO***
*** 1973-2026***
*** Born to unite SACCO, died dividing their billions***
*** KSh 13 billion vanished, trust buried with it***
*** RIP- Restitution In Progress.***
KUSCCO (Kenya Union of Savings and Credit Cooperative Societies) Limited, born on 19th September 1973 under the Co-operatives Societies Act, was supposed to shelter Savings and Credit Co-operative Societies(SACCOs) from the rain. Instead, the Upper Hill outfit ended up becoming the storm as it gobbled up funds belonging to some 247 SACCOs. Few will be refunded, many SACCOs have run to court to sue a Union who registration has since been cancelled. A lengthy liquidation process is now underway as the regulator prevails upon SACCOs to wipe out the KUSCCO losses from their books.
It started as the umbrella advocacy body for Savings and Credit Co-operative Societies(SACCOs), with the mandate of training, lobbying and networking.
All went well for the Union until leaders of the Union, out of sheer greed and weak legal structures to govern such Secondary Co-operative Societies, veered off from that mandate into the lucrative business of providing financial services.
Under the watch of helpless regulators, the Union began designing products such as an inter-Sacco lending facility, mortgages and insurance products as well as selling land and property.
The Union began taking in deposits and giving out short and long term loans to financially distressed SACCOs, all the while without regulatory oversight.
When the red flags were raised about the Union failing to meet cash requirements of SACCOs at its inter-lending facility and disclosure that it was running unregulated entities, there was panic and SACCO came into to withdraw their deposits. In the ensuing melee, the entire KUSCCO Board and Management was dismissed as auditors came in to check the books.
The verdict was brutal. A PwC Forensic audit found that the Union had lost KSh 9.3 billion through cooked books that showed fake profits and concealed expenses amounting to KSh 3.7 billion. These included KSh 2.4 billion in hidden interest expense and staff commissions of KSh 710 million. KUSCCO executives were found to have withdrawn KSh 1.6 billion for marketing purposes but only repaid KSh 1.1 billion and pocketed KSh 0.5 billion. This is in addition to KSh 821 million overpaid to insurance brokers after the Union forced these firms to over- quote.
KUSCCO also splashed KSh 11.1 billion across its 5 subsidiaries with only KSh 286 million coming back to the coffers with some KSh 6.5 billion going up in smoke.
Out of some KSh 839 million withdrawn to ‘’replenish FOSAs’’ quasi-baking facilities run by KUSCCO, only KSh 633million reached the strongroom. Some KSh disappeared between 2018 and 2023 with KSh 135 million said to have been delivered to key figures in the KUSCCO c-suite.
Even more damning, all the fraudulent transactions at KUSCCO were allegedly signed off by a deceased internal auditor.
When Grant Thorntown auditors arrived at the KUSCCO offices this year, they found an insolvent KUSCCO who assets were worth KSh 5.4 billion against liabilities of KSh 17 billion, therefore its books showing a deficit of KSh 12.5 billion.
The Union had no asset register, loan book support and was in need of fresh cash injection of KSh 14 billion.
SACCOs that had put their deposits, lined up in court to demand a total of KSh 16 billion through 291 legal suits, now pending before court.
Funeral arrangements were conducted for KUSCCO at All Saints Cathedral Hall, Nairobi, on August 28th 2026 with the mass and final prayers conducted by the Commissioner for Co-operatives Development, with representatives from the SACCO fraternity in attendance.
Under the blind eye of two regulatory bodies, assets and cash deposits held at KUSCCO Limited were carted away, leaving behind a trail of losses to SACCOs, insurance companies, capital market and real estate firms that had invested heavily in the Union’s unregulated financial instruments.
In a damning report by the Central Bank of Kenya(CBK), the monetary authority blames the heist at the Union on weak internal audit or was weakened strategically to facilitate theft, fraud and misreporting.
The Kenya Financial Sector Stability Report, 2025 published by CBK, mentions that KSh 1.33 billion worth of loans to dormant SACCOs, KSh 9.3 billion in overstated incomes from a fraudulent scheme, and KSh 206 million in cash of member funds, was lost.
The worst hit was some 247 out of 257 licensed Deposit-Taking SACCOs which lost their deposits with the Union. 201 SACCOs reported a 10% erosion of core capital owing to KUSCCO exposure.
Members of affected SACCOs earn less dividends today as SACCOs increase provisioning to cater for losses. SACCO borrowers also face tighter credit conditions while a decline in deposit mobilization and investment activities increased inter SACCO exposure.
The insolvency at continues to affect liquidity levels of affected SACCOs. The KUSCCO shocks is said to be still reverberating through insurance, money and housing markets due to interlinkages created by KUSCCO’s Assurance, Housing and Asset Management subsidiaries.
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