Kuscco bosses quit amid probe on deposit-taking business
Kenya Union of Savings and Credit Co-operatives Limited Managing Director George Ototo (left) and National Chairman George Magutu during a past conference. PHOTO | SALATON NJAU | NMG
The board of Kenya Union of Savings and Credit Co-operative Society (Kuscco) has parted ways with its long serving managing director George Ototo and national chairman George Magutu amid regulatory questions into the institution’s deposit-taking activities.
The umbrella body, which started as an advocacy institution before morphing into an unregulated deposit-taking operation, did give reasons for the changes in its top leadership.
"We announce the departure of National Chairman Mr George Magutu and Group Managing Director Mr George Ototo," Kuscco said in a communication to all member savings and credit co-operative societies (saccos) on January 15, 2024.
“We understand that change can bring uncertainty, but we assure you that this transition is part of our ongoing efforts to ensure efficient service delivery to members.”
Kuscco appointed David Langat from Imarisha Sacco in the Rift Valley region as its new chairman of the board of directors. It also picked Arnold Munene as the acting managing director with effect from January 15, 2024.
Mr Ototo, who had been with Kuscco since 2010, declined to comment on the circumstances of his exit.
Kuscco’s deposit-taking activities without regulation of the Sacco Societies Regulatory Authority (Sasra) has come under the spotlight in recent years.
Co-operatives and Micro, Small Medium Enterprises Cabinet Secretary Simon Chelugui in October last year directed Sasra to investigate Kuscco and establish whether it is running regulated sacco business in violation of the law.
Mr Chelugui observed that Kuscco appeared to be operating a regulated sacco business without being licensed, quoting extensive correspondence between Sasra and the umbrella body.
He added that regulated sacco business as prescribed by law entails either deposit-taking sacco business or specified non-deposit-taking business.
A review of Kuscco by-laws show that there are provisions for its involvement in deposit-taking although the organization is fashioned as an outfit that lobbies for the growth and development of saccos in the country.
The Central Bank of Kenya (CBK) in a separate letter written in March 2022 also asked Sasra management to look into issues raised by shareholders of Kuscco who said the institution was operating outside regulatory oversight despite holding more than Sh20 billion in member funds and deposits.
“They attribute the omission to their origins as an advocacy umbrella body. However, they have in the intervening period engaged in commercial activities that include deposit-taking and lending activities. The members indicate that these additional activities have not been licensed by Sasra,” the apex bank said.
“Accordingly, and given that the matter falls within your regulatory and supervisory remit, we believe this can also be considered as part of the ongoing efforts to strengthen the sector and engender public confidence.”
Established in 1973, Kuscco serves as the umbrella body for savings and credit cooperatives (Saccos) in Kenya, boasting over 4,000 affiliated Saccos and a membership exceeding 4 million.
