The Kenya Union of Savings and Credit Cooperative Society Ltd (KUSCCO) fired its Group Managing Director, George Ototo, as well as the National Chairman, George Magutu, earlier this week.
- The two senior officials have been replaced with David Langat as the new Chairman, and Arnold Munene as acting MD.
- Their departure comes after the Co-operative, Small, and Medium Enterprises Development Cabinet Secretary (CS) Simon Chelugui last year ordered an inquiry into suspected violations of Saccos regulations by the Union
- The CS also directed the Sacco Societies Regulatory Authority (SASRA) to investigate the matter.
KUSCCO is a union of co-operatives but it rarely plays the advocacy role that it was primarily designed to execute. It offers financial services to Saccos i.e. loans and insurance services, and some technical services such as consultancy, by-laws drafting, that are too expensive for many Saccos.
“We announce the departure of National Chairman, George Magutu and Group Managing Director George Ototo,” Langat said in a letter copied to all staff of KUSCCO.
A highly placed source within the KUSCCO Board of Directors disclosed that there was no illegal business that the apex body for Saccos was undertaking. “It is true that KUSCCO has several unique financial products, including those that deal with advocacy, risk management, and a mutual fund that is partly supervised by the Insurance Regulatory Authority ,” said the official who requested anonymity.
- In a letter to SASRA, Simon Chelugui, Cabinet Secretary for Co-operatives and Micro, Small, and Medium-Sized Enterprises Development expresses his suspicions that KUSCCO Limited appears to be carrying out unregulated Sacco business.
- CS had directed that SASRA lead the probe into KUSCCO affairs and sanction any of its officials found culpable.
- The lobby group is said to have expressed reservations about surrendering its central finance facility so that it can be better funded and be accessible to all Saccos.
With sanctions already taken on Ototo and Magutu at KUSSCO, its central lending facility could now be open for a takeover. The fear within KUSCCO has been that relinquishing control of its central finance facility could end up crippling the organization since this platform is said to be its biggest cash cow.
A fully operational inter-lending facility for Sacco implies that soon these financial societies will be able to meet their liquidity shortfalls or even do electronic funds transfers as well as allow those with excess cash to gain immensely through the platform. Analysts maintain that allowing SACCOs to have an inter-lending facility could force commercial banks to lower their loan rates to compete with SACCOs.
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