A court order obtained by the Kenya Union of Savings and Credit Co-operatives (KUSCO) on November 15, 2023 has barred the Sacco Societies Regulatory Authority (SASRA) from conducting an audit of its operations.
KUSCO, which is a deposit-taking institution that holds more than Kes 20 billion of deposits from the cooperative movement in Kenya, received a notice from SASRA on 10th November 2023, demanding that it submit its financial statements and other documents for examination.
However, KUSCO has not been licensed by SASRA to engage in deposit-taking and lending activities, unlike other Saccos.
This has caused anxiety among its members and other stakeholders about the security and soundness of their funds.
The question of KUSCO’s regulation was first brought up in March 2022 by the former Governor of the Central Bank of Kenya, Dr. Patrick Njoroge, in a letter to SASRA.
He stated that KUSCO members had raised concerns and expressed fear that their funds were not protected, saying that KUSCO was involved in deposit-taking and lending activities without a valid license and that SASRA was the suitable institution to regulate and investigate KUSCO.
However, the Jubilee government did not act on the recommendations of the CBK governor.
It was only after the Kenya Kwanza government under President William Ruto took over that SASRA was empowered to protect Sacco members’ deposits and enforce compliance with the law.
KUSCO has now disputed SASRA’s authority and gone to court to stop the audit process.
It alleges that SASRA has no jurisdiction over it and that it is only answerable to its members and the Commissioner for Co-operative Development.
It also claims that SASRA’s notice was issued in bad faith and without due process.
SASRA has pledged to challenge KUSCO’s court orders and continue with the audit as soon as possible, warning other Saccos that are operating without a license to comply with the law or face legal action.
SASRA’s director-general, John Mwaka, said that the regulator’s main goal was to safeguard the interests of Sacco members and promote the stability of the Sacco sector.