58 SACCOs risk asset seizure after defaulting on massive loans tied to collapsing cooperative union
The SACCO Loan Default Crisis Unfolds
The SACCO loan default crisis has escalated as more than 50 cooperatives across Kenya face possible auction over KSh 1.36 billion in unpaid loans to the Kenya Union of Savings and Credit Cooperatives (KUSCCO).
These loans were backed by member deposits amounting to only KSh 368.39 million, creating a shortfall of nearly KSh 988 million. The gap has triggered urgent demand letters requiring SACCOs to either repay or present formal repayment plans within 14 days.
According to Business Daily, top defaulters include a SACCO owing KSh 377.5 million, with smaller cooperatives in Lamu, Migori, and Malindi also listed.
KUSCCO’s Role in the SACCO Loan Default Crisis
The crisis is directly linked to the financial collapse of KUSCCO, currently under investigation for massive fraud and mismanagement. A PwC forensic audit revealed falsified financial statements, including forged signatures of deceased auditors, putting over KSh 13.3 billion in SACCO deposits at risk.
In March 2025, the Sacco Societies Regulatory Authority (SASRA) reported that regulatory failures allowed KUSCCO to operate unchecked. The fallout has caused an estimated KSh 14 billion in losses, with at least 201 SACCOs losing 10% of their core capital.
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To recover part of the lost funds, KUSCCO began auctioning properties in May 2025. These include land, homes, and commercial buildings belonging to defaulting SACCOs. The Kenyan government has endorsed the recovery strategy, aiming to reimburse affected members.
In response, the government introduced new governance frameworks in May and appointed a five-member Committee of Experts to review the outdated Sacco Societies Act of 2008. The reforms are part of a broader plan to restore stability and public trust in the cooperative sector.
