The Ministry of Co-operatives & Micro, Small and Medium Enterprises, led by Cabinet Secretary Simon Chelugui, has recently made a statement addressing allegations against the Sacco Societies Regulatory Authority (SASRA).
The allegations, stemming from social media, have set off a chain of legal actions that have thrust the microfinance sector into a legal maelstrom.
Pursuant to section 49 of the Sacco Societies Act, SASRA, the regulatory body overseeing Sacco societies, initiated an inspection with regular updates.
However, this inspection was abruptly halted on November 15, 2023, following a court order.
"This matter is being canvassed in court, and we await the determination. In the meantime, my office is pursuing this matter through all legal means possible to ensure the security of Sacco funds in KUSCCO. My office will issue a comprehensive statement at an appropriate time," Chelugui emphasized.
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The regulatory scrutiny didn't stop there. SASRA, in conjunction with the Ministry, delved into the financial transactions and governance practices of Metropolitan National Sacco, recommending an inquiry.
The findings, presented at a specially convened meeting of Sacco members, prompted the issuance of notices of surcharge to specific officials suspected of mismanagement.
"This action has been met with legal resistance," Chelugui stated, acknowledging that implicated officials have taken the matter to court to challenge the inquiry findings and the subsequent surcharges. The legal battle is currently awaiting determination in court.
Undeterred, the Ministry has referred the matter to the Directorate of Criminal Investigations (DCI) to investigate potential criminal conduct, including theft and fraud, by the implicated officials.
"We are committed to upholding the integrity of the microfinance sector and will take all necessary steps to ensure accountability," Chelugui asserted.
In a parallel pursuit, the Ministry, through SASRA and the Office of the Commissioner for Cooperatives, is actively seeking the recovery of funds owed to Network Sacco.
The outstanding amount, estimated at Sh87 million as of October 2023, reflects the determination of the Ministry to safeguard the financial health of the microfinance institutions under its purview.
As the legal battles unfold, the microfinance sector finds itself at a crossroads, with regulatory authorities determined to maintain transparency and accountability, even in the face of legal resistance. The outcome of these legal proceedings is poised to shape the future landscape of the microfinance industry in the region.
