The Kenya Medical Association Regulated Non WDT Sacco Limited (KMA) has taken the decision to write off a significant Sh525 million held in investments at the Kenya Union of Savings and Credit Cooperatives (KUSCCO), a cooperative currently embroiled in financial turmoil after mismanagement led to massive losses.

This move is rooted in KUSCCO's ongoing struggle with a reported loss of over Sh12 billion, as revealed by an audit carried out by PricewaterhouseCoopers (PwC).

The audit uncovered a host of irregularities, including non-performing loans amounting to Sh3.7 billion, inflated profits over the past six years totalling Sh798 million, and other alarming discrepancies such as Sh2.7 billion in questionable commissions and Sh1.3 billion in mishandled central finance funds.

In light of this, KMA has opted to make a provision for the impairment of its deposits in KUSCCO.

The association’s investments include Sh519.2 million in special deposits and Sh6.8 million in Jungu Kuu savings, which, after a thorough review, are considered unrecoverable.

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The most recent financial statement from KMA outlines the impairment of Sh525 million in KUSCCO funds, marking a significant loss for the SACCO.

“With KUSCCO Limited having been declared insolvent, the Board of Directors has considered and made a provision for impairment on the Sacco’s Special deposit of Sh519,197,175 and the Jungu savings amount of Sh6,796,307 held at KUSSCO Limited for a period of 10 to 15 years with a value of Sh35,066,232 being impaired in the financial year 2024,” the Sacco explained.

In addition to the special deposit impairment, a broader provision was made for the Sacco’s other cash and equivalents.

The total figure stands at Sh16,560,644, representing a 1 per cent provision on the Sh1.65 billion of other cash and equivalents held by KMA.

The situation at Kuscco prompted the government to intervene, taking control of its lending arm to mitigate the damage and restore some order.

The Cabinet Secretary for the Ministry of Cooperatives and MSMEs Development, Wycliffe Oparanya, reiterated the government's commitment to addressing the financial irregularities and regaining the public's confidence in the cooperative sector.

Despite a certificate of balance from KUSCCO confirming the total deposits and savings figure of Sh525,197,175, KMA has expressed doubts about the feasibility of recovering the funds.

“Even though the certificate of balance shows the total deposits and savings amount as Sh525,197,175, we consider the reported balance as unrealizable, hence the need to have the amount impaired as per the International Financial Reporting Standards (IFRS 9) and the Sacco Societies Act, No. 14 of 2008,” KMA stated.

As KMA faces the fallout from KUSCCO's financial turmoil, it continues to navigate its options in light of the Sacco’s mounting losses. The outcome of this intervention may set a precedent for other cooperatives grappling with similar challenges.

As KMA faces the fallout from KUSCCO's financial turmoil, it continues to navigate its options in light of the Sacco’s mounting losses.

The outcome of this intervention may set a precedent for other cooperatives grappling with similar challenges.