Sh3 billion SACCO fraud exposes deep governance, regulatory gaps
These losses, driven by unremitted deductions, liquidity issues, and failure to meet required financial standards, are threatening the stability of the sector and the trust of its members.
The Savings and Credit Cooperative (SACCO) sector is grappling with over Sh3 billion losses each year due to internal fraud, poor controls, and weak leadership structures, according to the Sacco Societies Regulatory Authority (SASRA).
These losses, driven by unremitted deductions, liquidity issues, and failure to meet required financial standards, are threatening the stability of the sector and the trust of its members.
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During a SACCO empowerment forum hosted by the NCBA Group in Nairobi, the Commissioner of Cooperatives at the State Department of Cooperatives, David Obonyo, raised concerns over the impact of these challenges.
Obonyo said they continue to affect loan disbursement and the sector’s overall performance.
“As a ministry, we are committed to working hand in hand with financial institutions like NCBA to create a thriving, transparent and technology-driven SACCO ecosystem,” said Obonyo.
He noted that stronger governance, better access to financing, and adoption of digital tools would help Saccos remain ethical, competitive, and ready for future growth.
“The success of Saccos relies on the strength of their governance and ability to embrace innovation,” Obonyo said.
At the forum, professionals from the cooperative and financial industries examined ways to strengthen board functions, boost cybersecurity preparedness, and use innovation to improve service delivery and long-term growth in the Sacco space.
NCBA Group managing director John Gachora emphasised the central role Saccos play in driving financial inclusion, with the sector serving over six million members and holding assets worth over Sh1 trillion.
Gachora said the future of SACCOs depends on how well they manage their operations and adopt technology.
“In the Sacco space, this means deep listening, co-creating products with SACCO leaders, and ensuring we deliver tools that enhance operational efficiency, member value, and long-term resilience,’’ Gachora said.
“We believe that empowering Saccos to serve their members better is not just a business priority, it is a national development goal,” he added.
The forum followed the release of a damning forensic audit by PricewaterhouseCoopers (PwC) into the Kenya Union of Savings and Credit Cooperatives (KUSCCO), which exposed serious financial mismanagement and unchecked fraud.
The audit found that KUSCCO was operating in a state of insolvency, with its liabilities exceeding assets by Sh12.5 billion.
It further uncovered that at least Sh13.8 billion was lost through years of fraud and abuse, made possible by a lack of oversight and failed governance.
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The revelations have shaken the sector, with pressure mounting for immediate action to clean up the cooperative movement and strengthen the regulatory framework.
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