Court spares saccos from Sh8.8bn Kuscco write-offs

Court Exempts Saccos from Mandatory Write-Offs in Kuscco Fraud Case

The State had urged large savings and credit co-operative societies (saccos) to allocate provisions for their Kuscco investments and reduce dividend payouts to maintain liquidity. However, the High Court has blocked a Sacco Societies Regulatory Authority (Sasra) directive requiring saccos to set aside funds covering losses from the Sh13.3 billion fraud at Kenya Union of Savings and Credit Co-operatives (Kuscco).

Legal Challenge Against Sasra Guideline

The contested guideline mandated saccos to prepare provisions for expected losses on Kuscco deposits and shares, aligning with the International Financial Reporting Standards (IFRS 9), which require immediate recognition of anticipated asset losses by lenders.

Despite these accounting standards, the court found the Sasra guideline was hastily issued without adequate public consultation, leading to its nullification.

Impact on Saccos and Members

The ruling alleviates concerns about potential freezes or cuts in dividend distributions, preserving the financial benefits that sacco members have received. Over the five years up to 2023, including during the Covid-19 economic downturn, members enjoyed annual dividend payouts between 8.22% and 10.22%.

“There is no proportional nexus between the objective and the rationality or justification whatsoever in the guideline that was advanced that was satisfactory to the court.”

This decision highlights the tension between regulatory directives and procedural fairness in financial governance.

Author’s summary: The court's nullification of Sasra's provision directive shields saccos from forced Kuscco losses write-offs, maintaining stable dividends despite regulatory and accounting conflicts.

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Business Daily Africa Business Daily Africa — 2025-11-05

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