Cyber Criminals target Sacco funds as managers remain reluctant to divulge details

A survey conducted by The World Council of Credit Unions’ (WOCCU) and Kenya Union of Savings and Credit Cooperatives (KUSCCO) among others between April and May 2020 involving 18 SACCOs, found that 5 out of these SACCOs had suffered cyber-attacks in the past, with 4 out of these 5 having no system for transactions monitoring

PART ONE….

By The Weekly Vision

The cooperative movement in Kenya has become a major target for cyber-attacks because of the colossal financial resources at their disposal, yet most of them have made minimal or no investment in cybersecurity protection measures. 

The Kenya Union for Savings and Credit Cooperatives (KUSCCO) has said that the appetite for digital financial services cannot be gainsaid with criminals targeting to land their hands at the billions of millions controlled by Saccos.

According to the 2019 Kenya Bankers Association’s (KBA) Customer Satisfaction Survey, customers’ preference for mobile, internet and ATM banking in 2019 stood at 57%, 34%, and 31% up from 49%, 16%, 15% respectively in 2018—a significant increase from one year to the next. The survey documents that while financial institutions were already pressed to provide digital financial services to customers, the current deadly COVID-19 pandemic has proved to be the ultimate catalyst driving financial institutions to embrace technology like never before.

Kenya Police Sacco National Chairman David Mategwa, his Sacco was reported to have invested Ksh. 600 million in an IT system to secure funds from hackers targeting Saccos with weak platforms

It states in part: “Even the casual observer will tell you that digital is a fundamental piece in the business continuity equation. But it is being grossly abused by relentless cyber criminals’ intent on looting cash from financial institutions.”

The report says that the upward trajectory in the use of digital services inevitably carries with it cyber risks. According to the Africa Cybersecurity Report by Serianu Ltd, cybercrime was estimated to cost the Kenya economy USD 210 million in 2017. A 2018 survey by the same firm reported that 97% of SACCOs in Kenya spend less than USD 10,000 a year on cybersecurity.

While this may seem alarming, it is reflective of broader under-investment in cybersecurity in Kenya, as Serianu found that only 7% of Kenyan companies across the 12 sectors it surveyed in 2017 spent more than USD 10,000 a year on cybersecurity.

To understand the level of preparedness of SACCOs in Kenya to shield themselves and their members from cyber-attacks, The World Council of Credit Unions’ (WOCCU) through a USAID Cooperative Development Program (CDP) – Technology and Innovation for Financial Inclusion (TIFI) project, partnered with the Kenya Union of Savings and Credit Cooperatives (KUSCCO) and IRNet Coop Kenya (ICK) Limited to conduct a small survey of the cybersecurity readiness of SACCOs.

The survey, which was conducted between April and May 2020 with 18 SACCOs, found that 5 out of these SACCOs had suffered cyber-attacks in the past, with 4 out of these 5 having no system for transaction monitoring.

The report states that: “the SACCOs were however reluctant to divulge details about the nature and level of losses incurred during the attacks. There were 8 cases where SACCOs did not have a digital transformation strategy, 5 cases where there was no cybersecurity policy and 9 cases where there was no cybersecurity budget.”

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