Moi University SACCO Survives Auctioneers’ Hammer

Moi University SACCO Society (MUSCO) is poised to rise again from the ashes if a rescue plan drawn by a task force appointed by the Cabinet Secretary for MSMEs and Cooperatives results in its revival.

An interim Board of five members has been elected to oversee the operations of MUSCO pending the election of a substantive Board and Supervisory Committee within the legally prescribed timelines.

“This reinstatement is not an endorsement of past failures. It is a second chance that is anchored on strict expectations around governance, compliance, and ethical leadership. Where culpability is established, accountability will be enforced without hesitation. The protection of members’ savings remains non-negotiable,” said Wycliffe Oparanya, Cabinet Secretary for MSMEs and Cooperatives Development.

When liquidators descended on Moi University SACCO in 2018, this giant Savings and Credit Cooperative Society was technically insolvent and had defaulted on a KSh 200 Million Cooperative Bank of Kenya loan, used to construct its head offices known as MUSCO Towers, situated in Eldoret.

The Society was unable to refund money to members who had left, and could not even provide life insurance to deceased members.

Moi University SACCO also failed to meet all the statutory financial and liquidity ratios as set out by the Sacco Society Regulatory Authority(SASRA), prompting the liquidators to move in.

In the ensuing melee, Moi University Sacco members have in the past held demonstrations in Eldoret, protesting against the sale of MUSCCO towers, the Society’s HQ, by Co-operative Bank of Kenya. The lender’s unpaid construction loan had accumulated to over KSh 600 million against Moi University Sacco Tower which is valued at KSh 350 million.

Trouble for MUSCCO first began in 2018, when its license was revoked and the Society later on placed under liquidation the following year.

The then Commissioner for Co-operative Development Mary Mungai cancelled the registration of MUSCO and appointed two liquidators to take custody of the Society for a year.

In November 2019, the then Acting Commissioner for Co-operatives Development Geoffrey Njang’ombe moved in with liquidators into Moi University SACCO, to recover cash belonging to members of this society.

The liquidation process was delayed by petitions within the Senate and protests from members until the CS Cooperatives Wycliffe Oparanya appointed a taskforce to draw up a MUSCO rescue plan.

Members of this taskforce included Joshua Choge (Chairman), Eric Kipkoech Korir, Stephen Kibungei, and 12 others. The joint Secretaries were Elsama Ndegwa and Esther Cherubet Mutai.

According to a Gazette Notice No 16776, the taskforce was to ascertain the status of membership of the MUSCCO, and the foregone potential membership since the liquidation order was put in place.

The taskforce was also to establish the financial status of MUSCCO, including its assets and liabilities; undertake a review of the financial and non-financial performance indicators of MUSCO before the appointment of a liquidator and establish the investment trends, portfolio, and compliance challenges faced by MUSCCO that led to the appointment of a liquidator, and the probabilities of any resolutions.

The taskforce was also required to look at the performance of the Society’s loan book; and determine the status of MUSCCO Towers in terms of ownership, financing construction operations, and outstanding obligations.

The Government team was also to determine the impact of the continued liquidation of MUSCCO on its members, clients, and ancillary services and will also assess the potential social and economic benefits of the Society’s revival.

The team was to remain in office for three months ending March 7th, 2024 but has since had several extensions.

Moi University Sacco (MUSCO) faced financial problems and near collapse due to a combination of factors, primarily stemming from the SACCO’s financial mismanagement and its inability to repay loans related to the MUSCO Towers project. This led to a decline in membership as members lost confidence and withdrew their deposits.

MUSCO is said to have borrowed extensively, including for the construction of the MUSCO Towers, which was intended to generate income. However, the building’s returns were insufficient to cover the loan repayments.

MUSCO was also accused of using member funds to service its loans, indicating a serious breach of financial responsibility and further eroding trust.