KUSCCO to Be Transformed Into Federation as CS Wycliffe Oparanya Unveils Sweeping SACCO Reforms After KSh13.3bn Scandal
The government has unveiled plans to transform the Kenya Union of Savings and Credit Co-operatives (KUSCCO) into a federation in what marks one of the most significant overhauls of Kenya’s cooperative movement following last year’s KSh13.3 billion financial scandal.
The proposed restructuring, announced by Cabinet Secretary for Co-operatives and MSMEs Development Wycliffe Oparanya, is aimed at restoring public confidence, strengthening governance and introducing tighter oversight across the SACCO sector.
Speaking on Thursday, July 16, after holding a high-level meeting with KUSCCO’s Board of Directors, Oparanya revealed that the Ministry will soon convene a nationwide engagement with SACCO leaders to prepare them for far-reaching reforms contained in the proposed Co-operative Societies Bill.
The CS said the meeting at KUSCCO focused on assessing the progress of the institution’s restructuring programme following the government’s intervention after the multi-billion-shilling scandal.
“I visited KUSCCO, where I received a comprehensive briefing on restructuring the organisation to strengthen governance, improve operational efficiency, and restore confidence in the cooperative movement,” Oparanya said.
He added that the Ministry had been encouraged by the progress made in recovering assets that were lost during the financial crisis.
“I was encouraged by the strides made in recovering assets to safeguard the interests of members, as well as the ongoing preparations to transition KUSCCO into a federation in line with the envisioned reforms,” he added.
KUSCCO’s Role to Change Completely
Under the proposed reforms, KUSCCO will no longer continue operating under its traditional dual mandate.
Instead of serving both as an umbrella body for SACCOs and a financial services provider, the organisation will become a federation whose primary responsibility will be promoting good governance, policy advocacy, capacity building and oversight within Kenya’s cooperative movement.
The government believes separating these responsibilities will eliminate conflicts of interest while improving accountability and transparency across the sector.
The restructuring forms part of broader reforms expected to be anchored in the proposed Co-operative Societies Bill, which seeks to modernise Kenya’s cooperative legal framework.
According to Oparanya, the Ministry is preparing extensive consultations with cooperative leaders before the legislation is enacted.
“As we move closer to the enactment of the Bill, the Ministry will convene a series of engagements with cooperative leaders across the country to apprise them of the reforms and prepare the sector for effective implementation,” he said.
Reforms Follow KSh13.3 Billion KUSCCO Crisis
The restructuring follows one of the biggest financial crises ever to hit Kenya’s cooperative sector.
In 2025, investigations uncovered an estimated KSh13.3 billion financial scandal at KUSCCO, exposing years of alleged financial mismanagement, weak internal controls and governance failures within the organisation.
The scandal placed billions of shillings belonging to SACCO members at risk and forced numerous savings and credit cooperatives to revise their financial statements after writing off investments held through KUSCCO.
Following the release of a forensic audit into the losses, the Ministry of Co-operatives assumed direct operational oversight of KUSCCO to supervise its restructuring, stabilise operations and spearhead governance reforms.
The latest announcement signals the government’s determination to rebuild confidence in Kenya’s cooperative movement while preventing a repeat of the financial failures that shook one of the country’s most important savings institutions.
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