The EACC (Ethics and Anti-Corruption Commission) has presented a report to the State Department for Co-operatives, identifying governance gaps and recommending reforms to strengthen oversight and curb corruption in the sector.
The EACC Report covered technical and support functions within the State Department, as well as semi-autonomous government agencies, including the Sacco Societies Regulatory Authority (SASRA), New Kenya Co-operative Creameries Limited (New KCC), and the New Kenya Planters Co-operative Union.
Speaking during the presentation of the report, EACC Commissioner Col.(Rtd) Alfred Mshimba underscored the importance of safeguarding the integrity of the co-operative sector and protecting its resources from corruption.
“Every resource safeguarded from corruption is a resource available for investment in housing, education, enterprise, agriculture, and the welfare of Kenyan families,” he said.
This development comes as financial co-operatives who had invested billions in deposits with the cash–strapped Kenya Union of Savings & Credit Cooperatives (KUSCCO) Limited’s Unregulated Central Finance Facility and Mutual Assurance business, come to terms with their losses.
KUSCCO is said to have lost an estimated KSh 13 billion, cash that was lost through suspected theft and illegal lending practices by the Union’s past officials. Deposit-Taking SACCOs that had deposits with the Union have had to make provisions against these losses, denying members access to loanable funds.
The Commissioner for Co-operatives David Obonyo urged the State Department to give the findings due consideration and take the necessary steps to implement the proposed reforms.
He also called for continued collaboration between the two institutions for the benefit of present and future generations.
Principal Secretary for the State Department for Co-operatives, Patrick Kilemi, welcomed the report and affirmed the Department’s commitment to reviewing its findings and implementing the recommendations.
He reiterated the Department’s dedication to working closely with the Commission to strengthen governance, enhance accountability, and curb corruption within the cooperative sector.
Among its key recommendations, the EACC report calls for strengthening governance and accountability mechanisms, enhancing oversight and internal controls, and addressing weaknesses that could create opportunities for corruption within the cooperative sector.
EACC report contents
This EACC report has assessed existing systems, policies, procedures, and practices in cooperatives to identify vulnerabilities and made recommendations on measures to strengthen internal controls.
The State Department for Cooperatives is now expected to develop an implementation plan and submit it to the EACC for ongoing monitoring.
The EACC report comes as the co-operatives await to repeal the outdated Co-op Act Cap 490 that has presented legal bottlenecks to growth of the sector. Top executives in the SACCO industry have disclosed that yet to be enacted Co-operatives Bill, will improve governance in the cooperatives sector and ease the cost of doing business.
At present, SACCOs are not able to access the National Payments System, cannot list and raise capital through the Nairobi Securities Exchange(NSE) and have no inter-lending facility to ease liquidity shortfalls.
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