The Kenyan government has issued a directive to 247 savings and credit cooperative societies (Saccos) to reduce dividend payouts and redirect funds to offset massive losses stemming from a fraud scandal at the Kenya Union of Savings and Credit Cooperatives (Kuscco).
The move follows revelations that the fraudulent activities have resulted in a staggering Sh13.3 billion deficit, impacting the financial stability of affiliated Saccos.
In a statement released today, authorities instructed the affected cooperatives to prioritize reserve funds to cover the shortfall, a decision that is likely to spark discontent among members expecting annual dividends.
The directive aims to safeguard the long-term viability of the Saccos, many of which serve as critical financial lifelines for Kenya’s middle and working classes.
The Kuscco fraud, which has been under scrutiny for months, involved mismanagement and alleged embezzlement of funds entrusted to the union by its member Saccos.
Investigations have pointed to systemic weaknesses in oversight and accountability, allowing the losses to balloon to unprecedented levels.
Government officials have defended the measure as a necessary step to stabilize the sector, though no timeline has been provided for when dividend payments might resume at normal rates.
Kuscco leadership has yet to comment publicly on the latest development, and it remains unclear whether criminal charges will be pursued against those responsible for the fraud.
The directive has sent ripples through the cooperative movement, with members and industry experts calling for stronger reforms to prevent future financial scandals.
