58 SACCOs Face Asset Auction Over Ksh1.36 Billion in Defaulted Loans Amid KUSCCO Scandal
At least 58 Savings and Credit Cooperatives (SACCOs) across Kenya are at risk of losing their properties through public auction after defaulting on loans totaling Ksh1.36 billion, raising fresh concerns about the governance of the country’s cooperative sector.
The loans were borrowed from the Kenya Union of Savings and Credit Co-operatives (KUSCCO) and were backed by deposits worth only Ksh368.39 million, resulting in a significant shortfall of nearly Ksh987.86 million.
According to demand letters sent to the affected SACCOs, they now have 14 days to settle the debt or submit structured repayment plans. Failure to do so will lead to the freezing of accounts and public auctioning of their assets.
Top SACCOs Among Defaulters
A report by Business Daily revealed that several well-known SACCOs are among the defaulters, including one with a staggering debt of Ksh377.5 million. Smaller SACCOs from Lamu, Migori, and Malindi are also listed, highlighting how the crisis cuts across different tiers of the cooperative movement.
Debt Crisis Tied to KUSCCO Scandal
The loan default fallout is closely tied to the wider KUSCCO scandal, which has rocked Kenya’s cooperative sector. Investigations have revealed alleged financial irregularities and fraud within KUSCCO amounting to between Ksh12 billion and Ksh13 billion.
A forensic audit by PricewaterhouseCoopers (PwC) uncovered shocking levels of misconduct, including claims that senior KUSCCO officials forged the signature of a deceased auditor to authorize fraudulent financial statements. This deception reportedly put Ksh13.3 billion in SACCO deposits at risk.
Regulator Points to Policy Failures
In March 2025, the Sacco Societies Regulatory Authority (SASRA) said poor legal frameworks and outdated policies allowed KUSCCO to continue operations unchecked—despite red flags being raised as early as three years ago.
According to SASRA, the scandal has contributed to a Ksh14 billion loss, eroding 10% of core capital across at least 201 SACCOs in Kenya.
Government Steps In With Reforms
In response to the crisis, KUSCCO began auctioning properties in May 2025—ranging from plots and homes to commercial buildings—that were used as collateral by defaulting SACCOs. This process is part of a broader recovery plan supported by the government to recoup lost deposits and protect the interests of affected members.
In a major policy shift, Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya announced the formation of a five-member Committee of Experts. The committee is tasked with reviewing the outdated Sacco Societies Act of 2008, signaling a renewed effort to modernize SACCO governance in Kenya.
“This is the beginning of a new era of accountability and sustainability within the SACCO sector,” Oparanya stated during the announcement.
Conclusion: A Sector at a Crossroads
The growing number of SACCOs facing financial ruin underscores the urgent need for regulatory reform, oversight, and transparency in Kenya’s cooperative movement. As SACCO members and the public demand answers and accountability, the government’s upcoming policy changes could mark a turning point for a sector long seen as the backbone of grassroots financial empowerment.