Kuscco is facing a major financial crisis following the Ksh 13.3 billion scandal that has left many savings and credit cooperative societies struggling to recover their money. To address the situation, Kuscco has announced a plan to sell a majority stake in its insurance subsidiary, Kuscco Mutual Assurance, to strategic investors.
This move is expected to raise capital while allowing the insurance firm to operate independently. The sale will provide much-needed funds to help compensate Saccos affected by the financial scandal.
Cabinet Secretary for Cooperatives and Micro Small and Medium Enterprises Development Wycliffe Oparanya confirmed that the restructuring plan will also involve auctioning properties owned by loan defaulters. Houses and land under the Kuscco Housing Cooperative will be sold, marking an end to the housing projects that were previously funded in areas like Kitengela and Kisumu.
This step aims to recover funds that were lost due to loan defaults and mismanagement. The government has also stepped in to guide Kuscco through a restructuring process that will see it shift its focus to advocacy and training. Its financial mobilisation role, which was previously handled by the troubled Central Finance Fund, will now be transferred to the newly created Sacco Liquidity Fund.
The Sacco Liquidity Fund will operate as a secondary cooperative under the regulation of the Sacco Societies Regulatory Authority. This is expected to create a more stable and transparent financial system for Saccos moving forward.
The money raised from selling Kuscco’s stake in the insurance subsidiary and auctioning properties will be directed into the Sacco Liquidity Fund. This will serve as working capital, ensuring that affected Saccos receive refunds from the collapsed Central Finance Fund. The new model aims to restore confidence in the cooperative movement and ensure that such financial scandals do not occur again in the future.
To ensure a smooth transition, the government has ordered the formation of a new nine-member board with a three-year mandate. This board will replace the current interim leadership and take charge of governance reforms. The goal is to rebuild trust in Kuscco and reassure Saccos that their investments are safe.
The restructuring plan is seen as a critical step in stabilising the cooperative sector and preventing further losses. The Kuscco financial scandal has had an impact on the cooperative movement in Kenya.
Many Saccos that had invested in the Central Finance Fund have been left struggling, with some facing liquidity challenges.
The government’s intervention aims to bring order and accountability to the sector. However, it remains to be seen whether these measures will be enough to restore full confidence in Kuscco and prevent a similar crisis in the future.
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