SACCOS to lose billions of members deposts following illegal withdrawals at KUSCCO
SACCOS are set to lose billions of shillings following illegal withdrawals amounting to Ksh. 6 billion at the Kenya Union of Savings and Credit Co-operative (KUSCCO)
SACCOS are set to lose billions of shillings following illegal withdrawals amounting to Ksh. 6 billion at the Kenya Union of Savings and Credit Co-operative (KUSCCO).
Depositors will also face significant losses depending on their SACCO’s exposure.
According to their financial results, Mhasibu SACCO is set to lose over Ksh. 480 million, while members of Kimisitu SACCO will lose over Ksh. 353 million.
Members of the Law Society of Kenya SACCO have not been spared either, with the SACCO expected to lose at least Ksh.19 million in investments, despite their efforts to terminate their investments with KUSCCO. The SACCO received a payment of Ksh.42.18 million, leaving a balance of Ksh. 19 million that KUSCCO failed to honour.
This trend has now forced the management of Stima Deposit Taking SACCO to write off their Ksh. 108 million deposits at KUSCCO, with a similar move coming from Balozi SACCO Society, which has written off a Ksh. 437.5 million investment in KUSCCO.
“The discussion we have with KUSCCO is important, but I think it’s an issue of provisioning, and that’s it. We are hopeful and do believe that KUSCCO will be revived, and we are leading that process to ensure that moving forward, we still need the advocacy,” said Stima SACCO CEO Dr. Gamaliel Hassan.
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The Principal Secretary in the State Department for Cooperatives has announced that they will oversee restructuring at both the SACCO Societies Regulatory Authority (SASRA) and KUSCCO to prevent a similar occurrence in the future.
“We are amending the SASRA Act of 2008 to ensure that anyone who is taking deposits is regulated by SASRA. We are going to relook at the setup of SASRA. Is SASRA operating optimally? Does SASRA have the capacity to regulate the 4,000 or so SACCOS we have? The answer is no… Our mantra has been that a shilling in a SACCO should be as safe as a shilling in the bank. If that’s what we want, then we should be able to do the things that banks are doing,” said Patrick Kilemi, the Principal Secretary for Cooperatives.
The reassurance from the government to SACCO members is that, in the end, they will receive some of their deposits, and that lessons from KUSCCO have been learned. However, the question that lingers in the minds of depositors is whether something could have been done to mitigate these losses.
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