Should I Save in a Sacco?

According to Sacco Societies Regulatory Authority (SASRA), more than a million Kenyans stopped saving in Saccos in 2021. More precisely, around 1.18 million Kenyans have existed in Saccos.

However, this was not the case in 2020 as the year saw an increase in the number of Sacco members – 5.8 million to 5.9 million. This represented a 3% growth rate.

The decline in the saving pattern is attributed mainly to the Covid-19 pandemic. The loss of jobs and the inconsistency in the economy have led people to hold on to money rather than invest in savings and Sacco stocks.

Figures from the regulator, the Sacco Societies Regulatory Authority (Sasra), show that 19.7 percent of SACCO’s 5.99 million members last year did not transact on their accounts for more than six months.

This came in a year when official statistics reported that 926,100 formal and informal sector jobs increased since last year.

The job growth was the result of the easing of Covid-19 restrictions, which led to the loss of 736,000 jobs in 2020, meaning a hiring increase of 190,000 jobs.

“In the year ended December 2021, membership in SACCOs increased 3.03 percent from 5.82 million members in 2020 to 5.99 million members in 2021,” wrote Sasra CEO Peter Njuguna in the annual management report.

With 1.18 million members being observed as inactive, most of them had not transacted for over six months with their SACCOs.

The result shows that the share of dormant accounts in deposit-taking (DT) and non-deductible (NWDT) SACCOs has not yet returned to pre-crisis levels.

Non-participating members rose 79.55 percent to 1.37 million, or 25.09 percent of DT sacco’s 5.47 million members in 2020, as companies resorted to layoffs, pay cuts and unpaid leave to deal with the shocks to survive the income crisis.

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Statistics from the regulator show dormant accounts in 176 deposit-taking SACCOs (DT), but they fell 22.26 percent to 1.07 million members from 1.37 million members in 2020.

Inactive accounts in 2021 remained higher than 764,472 accounts or 16.95 percent of all members in 2019 and 676,052 members (16.12 percent) in the previous year.

On the other hand, dormant accounts rose 52.69 percent to 114,930 accounts in 185 deposit and non-deductible SACCOs (NWDT) – which came under Sasra oversight last year.

During the year, non-performing loans (NPLs) reached Sh54.73 billion, representing a non-performing loan rate of 8.99 per cent of the loan book of Sh608.75 billion for 361 SACCOs.

DT-Saccos’ non-performing loans grew 16.08 per cent year-on-year to Sh46.27 billion, prompting credit unions to set aside Sh33.65 billion to cover potential losses.

Covid-19 and The Economy

The mounting layoffs reflect the struggles of workers and businesses in an economy recovering from a recession caused by the coronavirus.

This increased the burden on active members in business environments. Collateral such as cars, houses and land can secure one a loan.

Total deposits in 361 Saccos increased 9.80 percent to Sh564.89 billion in 2021. SACCOs, which accept deposits, accounted for 83.95 per cent of deposits totaling Sh474.25 billion, up 9.92 per cent from Sh431.46 billion last year.

“Saccos are social and economic organizations that focus more on the social sphere than they are good on the economy. The low average membership in individual SACCOs raises the question of their sustainability, especially given the intense competition within the sector space. . Funds from other financial service providers.”

SACCO’s assets grew 9.92 percent to Sh807.11 billion. DT-Saccos grew its assets at a steep rate of 10.10 per cent to Sh691.09 billion, while the value of non-deposit institutions rose 8.90 per cent to Sh116.02 billion.

However, Sasra banned four credit unions from accepting deposits from the public because they did not meet minimum operating standards.

This was the first time since 2019 that Sasra canceled the registration of deposit-taking SACCOs. The four non-renewed deposit-taking SACCOs had assets of Sh1.02 billion and Sh560 their license. million total. Deposit 2020.

The deregistered SACCOs are Comoco Nairobi, which controlled assets of Sh650 million and deposits of Sh350 million, Nyamira Tea (assets of Sh210 million), Nyanyuki Equator (Sh120 million) and Uchongaji of Mombasa (Sh40 million).

Liquidity Problems

The annulment of the licenses is a sign that the four federations were facing major liquidity problems and other serious organizational challenges.

The regulator said the Saccos whose licenses were renewed failed to meet “the minimum standards required for a Sacco to conduct a deposit business,” without specifying the conditions that were not met.

Among other things, the regulator requires all DT-Saccos to hold a minimum capital of at least Sh10 million at all times.

DT-Saccos must also maintain a capital-to-total assets ratio of no less than 10 percent. Capital to total deposits and institutional capital to total assets are set at a minimum of 8.0 percent.

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Can I get Financial freedom by saving in a sacco?

Is a Sacco still a suitable investment vehicle today? Irrespective of the change in savings and credit offers, people are still looking for a customer-friendly financial institution with barrier-free systems and processes.

Saccos offer financial services like banks do, but with a nice twist on almost anything that’s on the table. An inherently democratic institution, saccos are seen as the economic liberation of their members. And because of your membership, you play an important role in deciding who takes the leadership role.

Co-ops also follow the rules of share ownership, where your shares and savings give way to credit. You can also earn guaranteed annual dividends, Return on Investment (ROI).

Here’s how Saccos can help you build wealth.

1. Saccos Promote a Highly Disciplined Savings Culture 

If there’s one thing most people don’t understand, it’s following a savings plan.

Sacco membership rules require you to stay at home. You should contribute regularly and regularly to your savings. There is a set minimum amount that allows each member to set a monthly savings goal.

How can a savings structure help build wealth?

As a member you can invest your savings. Investing in real estate can be one of the smartest ways to grow your money and ultimately your wealth. Here, too, you are free to choose the investment plan that suits you best.

Some savings accounts can earn you a higher interest rate on your deposit. But you can also invest in an investment portfolio such as real estate, stocks, government bonds, or a retirement account. With good risk management, your investments can generate better returns and help you gradually build your wealth.

You may also need to improve your income to increase your savings. It’s a trickle-down effect that allows one to invest more and build more wealth.

2. Saccos Provide Asset Financing Facilities That Promote Investment 

A big benefit for many Sacco members, which is rare among mainstream banks, is the friendly funding opportunities. Thanks to Sacco membership, you can easily buy a car, build residential/commercial buildings and own land.

The great thing about this financing is the low interest rates on the loans, which allows you to avoid future debt burdens. Instead, you keep saving and building your investment portfolio.

For your investment to grow, you need support, and that’s where Saccos comes in. This type of financial loan is readily available when you need the latest machinery or technology.

Suppose you want to build a commercial building or buy a plot of land. You can get financing from your Sacco. As you repay the loan, the investment continues to be appreciated. It’s a win-win situation that maximizes profits over time.

3. Members Can Easily Access Low-Interest Loans 

Many Kenyans borrow and some are burdened with high-interest loans, resulting in a huge debt burden. Add saccos and the story changes.

Saccos generally charges members the lowest interest rates (1% per month on average) compared to other lenders such as commercial banks and microfinance institutions. The advantage is that you can save more and invest more. Unlike most banks, Saccos lending rates are predictable, allowing you to plan for the long term.

You can easily manage payments and also have the peace of mind that nothing will change during the repayment period.

Unlike banks and other lending institutions, Saccos tailors and designs all deposit and credit systems based on the member’s ability to pay. This makes it easy to borrow and save at the same time. It is also easy to invest and accumulate wealth without difficulty.

Low-interest loans allow you to take advantage of investment opportunities that are otherwise unavailable. Money that would be used to pay off debts goes into acquiring assets, creating a powerful and profitable collection of financial assets.

4. Annual Dividends Are an Excellent ROI (Return on Investment) 

One of the best investment strategies for Sacco members is to reinvest their annual dividends, which means more shares. Dividends can also provide you with a way to generate regular income without using up your savings.

Here are some ways you can invest your dividends:

Firstly, you can reinvest them by buying more shares of your Sacco.

Secondly, you can direct them by buying shares in different Sacco.

Thirdly, you can create a separate high-yield savings account that can earn you a good income from dividends alone.

The beauty of dividends is that they don’t care how the saccos or the economy as a whole are doing. It is a guaranteed payment that will continue to appear in your account each year based on your shares. More shares equal a tidy sum of money that you can save or reinvest. Diligently diversifying your portfolio with dividends can provide you with reliable returns over time.

5. Saccos Can Give You a Secured Loan at Three to Five Times Your Shares. 

Although you need guarantors to get a loan with your Sacco, the good thing is that unlike a bank, you can get three or more of your shares.

Many people use these loans to invest. Starting with the construction of commercial buildings, the development of an existing business and even the purchase of land and the construction of apartments. And since these are low-interest loans, you won’t get too hot when you start paying back.

You need a wise long-term investment plan to avail such loans. And in no time at all you will have a multitude of assets ready to be converted into a portfolio of impressive wealth.

Before you take out a loan, read your Sacco’s articles of incorporation and understand their fine print. Some Saccos prohibit members from receiving loans if they are an active member of another Sacco.

6. Members Can Join and Invest in Sacco Joint Projects  

Many Saccos have mutual investment programs that can also act as a catalyst for individual wealth accumulation.

How do these systems work? It’s very easy. Saccos foster a sense of unity among their members through their deeply rooted collaborative nature.

It’s about pooling resources and creating investment companies that generate revenue. However, you can invest in real estate and buy members at low interest rates.


A proven wealth-building strategy is to always save money, make investments, and patiently wait for that money to grow over time. It is acceptable to start small.

If you can save and invest money regularly, what’s stopping you from accumulating wealth?

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