Gichuki Kahome

How SACCOs Work in Kenya

You may have heard a lot about Savings and Credit Cooperative Society commonly referred to as a SACCO. If you have wondered how SACCOS work or how to invest your money in a SACCO or the benefits of investing your money in a SACCO, this article is for you.

What Are SACCOs?

A Savings and Credit Cooperative Society (SACCO) is a society that is registered and authorized to take money from its members in the form of deposits and lend money in the form of loans to its members.

The SACCO pools the savings and lends them out or invests in various investment vehicles such as Treasury Bills, Treasury Bonds, Shares, etc.

In Kenya, there are more than one hundred and seventy-five registered SACCOs.

They are regulated by the SACCO Societies Regulatory Authority (SASRA). As of 2021, SACCOs had a combined asset value of more than 393B shillings.


Many SACCOs in Kenya have restricted membership to the industry or sector of working. For example; Mwalimu Sacco is mostly for teachers. Magereza SACCO- for prison services employees. Safaricom SACCO- for workers at Safaricom PLC.

However, in recent years, some SACCOs are opening their membership to other members of the general public. For example, Stima SACCO is not only for members working for the Kenya power production company. Hence, Kenyans can now join most of the SACCOs which are open to the public.

Despite this, it is still advisable to join a SACCO where your workmates, friends, or relatives are members so that you can easily get guarantors when the need to take a loan arises.

How To Join A Sacco

To be a member of any SACCO, you must first buy shares of the SACCO. It’s only registered members who can save their money in the SACCO. Just like Stocks, every SACCO has a minimum share capital. This is the minimum amount of investment that members are required to contribute to be registered as members.

Monthly Contributions

Members of a SACCO are required to contribute at least a certain amount of money every month. The saving scheme of a SACCO is strictly regular. You have to make your contributions every month without fail. This is why SACCOs instill saving discipline in their members.

How SACCOs Work

In a SACCO, to save is to deposit, and to access your deposit is to borrow. In other words, you save money in a SACCO through monthly contributions but you can only access your money by taking out a loan. You have to take a loan to access the money.However, that should not discourage you as this is a win-win scenario for both the SACCO and its members. When you take the loan, you help the SACCO grow. You benefit as the SACCO gives you a loan that is three times your savings at a relatively low-interest rate compared to other financial institutions.

Accessing Loans

As discussed above, to access your money in a SACCO, you must take a loan. The loan you qualify for must be within the limit of your savings. Additionally, members have to save for not less than six months to be considered for credit. This may vary for different SACCOs but a minimum of 6 months is the average.

In many SACCOs, members qualify for loans that are up to three times their savings.While other institutions that offer financial services, such as banks insist on collateral, for SACCOs, you only need members that will act as guarantors to guarantee your loan. Most SACCOs stipulate that the guarantor’s accumulated savings should be equal to the amount being borrowed. The guarantor bears the burden of the debt in case the member defaults on the loan. Moreover, the SACCO seizes your savings until you clear the debt. One thing that many SACCO members realize later than sooner is that loan repayment is usually separate from their regular savings plan. This means that members have to maintain their regular monthly contributions even as they repay their loans.

Factors To Consider When Choosing A Sacco

One of the questions that I’m asked frequently is: “Which SACCO should I join?” As I have often answered, you are the only person who can tell which SACCO suits you the best. You should join the SACCO that your work colleagues, friends, or relatives are members of. This is because it will be easier for you to get guarantors anytime you need to access your money through a loan. Hence the best way to know which SACCO to join is by first asking your friends, relatives, and work colleagues about the SACCOs they are members of.

Moreover, in almost all lines of profession, there are associated SACCOs that professionals working in those lines can join. For example, Mwalimu SACCO for teachers or Wahasibu Sacco for accountants.

Additionally, there are over 175 registered SACCOs in Kenya. It is very hard to know which is the very best since one cannot join all those SACCOs at the same time.

Here are some factors to help you know which SACCO you should join:

1. Authorization

The first question you should answer is whether the SACCO is registered. A quick way to find out is by checking if the SACCO is listed on the SASRA website. The SACCOs Societies Regulatory Authority (SASRA) lists all the registered SACCOs in the country. With the increased number of scammers who are availing the hottest investment deal every day, you should be very careful where you put your money. The last thing you want to do is lose your hard-earned money to scammers.

2. Safety of Your Money

You want to have insurance for your money. Make sure that the SACCO you join is not only registered but it is also insured.

3. Interest Rate on Loans & Deposits

Take a keen interest rate on the loans and the deposits. Try and compare it with that of other SACCOs. Remember that SACCOs pay annual dividends to their members and the interest rate on deposits will affect the amount of money you get as dividends. Most SACCOs publish this kind of information on their websites.

Kindly note that for interest rates, some SACCOs have put it in monthly rates while others have put it in annual rates. When doing the comparison, make sure you use a common benchmark for all of them.

4. Technology

In this day and age, you won’t love a SACCO that will keep you flocking their offices all the time while other people are communicating back and forth with their SACCOs in the comfort of their homes through their mobile phones.

5. Loans Repayment Period

Go for the SACCO with the most flexible terms. You will want to be given enough time to comfortably be able to clear your loans.

Advantages of SACCOs

1. They help you develop a habit of saving

With a SACCO, you are required to save at least a certain amount of money every month. This compulsory monthly contribution will help you develop a saving habit. And as we all know saving is the foundation of financial independence. It is not how much you earn, but how much you keep that matters. You can build wealth without a high income, but you cannot build wealth without savings.

2. Members can Easily Access Loans

With a SACCO, you are required to save at least a certain amount of money every month. This compulsory monthly contribution will help you develop a saving habit. And as we all know saving is the foundation of financial independence. It is not how much you earn, but how much you keep that matters. You can build wealth without a high income, but you cannot build wealth without savings.

3. SACCOs are Life Savers

This is because they offer their members emergency loans within 24 hours. They are a perfect backup to your emergency fund. In case of any emergencies, you can always get an emergency loan from your SACCO.

4. SACCOs issue Dividends Annually

As a member of the SACCO, you own shares of the SACCO, so you will be entitled to receive annual dividends. SACCOs tend to have good dividend rates of more than 10%. You can reinvest the dividends to better your savings or you can use the dividends to meet your other needs.

5. SACCOs offer interest on Savings/Deposits

When you save your money with a SACCO, you will get good returns from a low-risk investment. This is not only through dividends but also through interest earned on your savings or deposits with the SACCO.

6. Next of Kin Benefits

In case of your death, some SACCOS write off your loan while your savings are given to your next of kin.

7. Money Back Guarantee

In case you leave a SACCO, you get your money back.

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