By The Weekly Vision Reporter
The management of Harambee Sacco has long presented its members with a story of renewal, of an institution that confronted its “tarnished legacy” of mismanagement and rebuilt itself into one of Kenya’s most trusted saccos. That narrative, however, sits uneasily alongside a less flattering reality. The sacco has reportedly written off its entire Sh184 million investment in the Kenya Union of Savings and Credit Co-operatives (KUSCCO), one of the largest single write-offs disclosed by any sacco caught up in the scandal. Yet members appeared to have had little meaningful say in the decision.
When news of the write-off emerged, Harambee’s Chief Executive Officer, George Ochiri, portrayed it not as a failure but as a demonstration of transparency, a move to “clean our books” and pave the way for a proposed Sh4 billion capital-raising programme. The central issue is stark: a sacco that lost Sh184 million of members’ accumulated share capital is now asking those same members to inject billions more in fresh capital while promising annual dividends of 15 per cent on share capital through to 2028.
While that distinction may provide legal clarity, it does little to answer why a sacco of Harambee’s size and sophistication, the country’s fourth largest by assets, with approximately Sh38 billion under management, accumulated such significant exposure to an umbrella body that a PwC forensic audit later found to be insolvent by Sh12.5 billion, with its accounts allegedly manipulated by Sh9.3 billion and at least 23 senior managers implicated.
Equally absent from Harambee’s explanation is a detailed account of how the exposure was allowed to grow or whether anyone within the sacco has been held accountable. The write-off was approved with the support of the auditors and guidance from the regulator, suggesting that the board, chaired by long-serving chairman Macloud Malonza, was keen to move forward rather than revisit the decisions that left members’ funds invested in what investigators later described as a fraudulent institution.
This is not, by Harambee’s own admission, the first governance challenge the sacco has faced. Its leadership has acknowledged that the years before 2019 were characterised by mismanagement and embezzlement under previous administrations. The KUSCCO write-off therefore serves as a reminder that institutional reforms, however significant, do not necessarily eliminate future governance risks.
Perhaps the most striking aspect of the episode is what did not change. Harambee distributed Sh2.38 billion in dividends to members even as the KUSCCO scandal shook the wider sacco sector. It formed part of a broader trend in which Kenya’s top 40 saccos increased dividend payouts to nearly Sh47 billion, up 13.7 per cent, despite a government advisory urging institutions to reduce dividends and strengthen provisions against KUSCCO-related losses.
Harambee’s loss did not occur in isolation. It forms part of a nationwide reckoning in which 247 saccos were instructed to make provisions against losses arising from KUSCCO’s collapse. The government declined to publish the full list of affected institutions, citing concerns that disclosure could trigger panic withdrawals. Other major saccos, including Balozi, Mhasibu, Kimisitu and Stima, have also disclosed substantial losses.
Yet Harambee’s case arguably warrants closer scrutiny. A sacco of its size, financial strength and stated post-2019 governance reforms might reasonably have been expected to rank among the better-protected institutions in the sector rather than among those forced to absorb a complete write-off of such magnitude. Former KUSCCO executives, including former Managing Director George Ototo, former Finance Manager George Owino and former Chairman George Magutu, are yet to stand trial as investigations continue.
Until Harambee’s board provides a fuller public account of how the Sh184 million exposure accumulated and explains why generous dividend payments continued while the loss was being absorbed, members are likely to continue asking whether “cleaning the books” resolved the problem, or merely closed the file.
The write-off may have balanced Harambee’s accounts, but it has left unanswered questions about governance, oversight and accountability. Those questions are unlikely to disappear simply because the loss has been removed from the balance sheet.
