KUSCCO to wind down

The ‘collapse’ of KUSCCO, which held more than Ksh 24.8 billion in deposits collected from 247 member Sacco societies across Kenya, involved one of the biggest bankruptcy filings in Kenya’s history, and it generated much debate as well as legislation designed to improve accounting standards and practices, with long-lasting repercussions in the Sacco sector.

The decision was made during a Special General Meeting held in Nairobi on Friday, August 28, 2026, with stakeholders drawn from the cooperative movement expressing deep concerns over the Union’s deteriorating financial position and mounting legal obligations.

A liquidation process is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims.

This comes even as the government of Kenya plans to rename the Kenya Union of Savings and Credit Co-operatives (KUSCCO) to the Kenya Federation of Savings and Credit Cooperatives (KEFESCO), with the transition from a financial intermediary into an apex advocacy and training federation only, which it says aligns with the Cooperatives Bill.

That idea already faces fresh legal issues after a creditor, RUPSA Regulated NWDT SACCO Society Limited, asked the High Court in Nairobi to urgently weigh in on the matter, accusing it of attempting to reorganize its membership structure despite existing High Court preservation orders.

The Cooperative sector is presently awaiting the Senate to fast-track processing of the Draft Cooperatives Bill 2024, pending presidential assent.

The National Assembly passed the Bill with amendments on December 3, 2024, but the Senate struck it down after it underwent the first, second, and final readings on November 12 last year. The Senate then passed the Bill with amendments and referred the document back to the National Assembly for consideration on February 12th 2025.

By law, the two houses must agree on the amendments before the Bill is sent to the President.

According to those familiar with the issue, the delay in the National Cooperative Bill could be due to governance clauses and devolved functions between the National Assembly and the Senate.

Others believe that the industry’s vast resources appear to have attracted strong vested interests, all keen to control or delay the process.

According to the Senate Bill tracker, this draft, which was published two years ago, was passed by the Senate with amendments and referred to the National Assembly for consideration.  However, the National Assembly rejected these Senate amendments on Tuesday, 14th April, 2026. The Bill has thus been referred to a Mediation Committee.

“There is a lot of goodwill from the co-operatives sector about the need for legal and regulatory reforms.

At present, we have numerous forums that are disseminating information, most of which are not well-researched, doing the rounds.

This industry is huge, with a lot of resources, and therefore attracting the attention of vested interests and groups,” said CPA Joyce Waceke Ndegwa, Mentor SACCO Chief Executive Officer, while weighing in on the sector’s goings-on in a recent interview with Financial Fortune’s Content editor, Jackson OKOTH.

The New Cooperatives Bill, if enacted into law, seeks to establish a Deposit Guarantee Fund to compensate members in the event that a financially troubled SACCO goes under and is liquidated.

Available data shows that all Cooperative Societies, including SACCOs as well as Housing, Coffee, Dairy and Others, hold over KSh 1.5 trillion in deposits and assets.

While a sessional paper drawn to trigger a repeal of the outdated Cooperatives Act, Cap 490, has already been published, the document is still stuck in Parliament awaiting debate and approval.

Additional reporting by Jackson OKOTH