Why You Should Really Consider Joining A SACCO

Written by Wellington Ayugi

Saving while you are still energetic and productive, is a smart financial move. If you are earning an income, and are thinking about where best you can save that money, you need to consider a SACCO…

Saving while you are still energetic and productive, is a smart financial move. If you are earning an income, and are thinking about where best you can save that money, you need to consider a SACCO.

SACCOs have been gaining popularity in Kenya for the past two decades. However, young people are yet to fully embrace them as a way to save money because most of us are not familiar with the concept of SACCOs, exactly how they work and why are they so beneficial. SACCOs are the perfect option for young people who are looking to empower themselves financially.

What is a SACCO?

A SACCO (Savings and Credit Cooperative Organization) is a group of people with similar interests who come together to form a credit union. They register the union with the Ministry of Cooperatives, which in turn authorizes the SACCO to receive deposits and provide loans to its members. A SACCO is run members who are selected by the other members.

The emergence of SACCOs was a response to the long bureaucratic processes associated with Kenyan banks. They have become increasingly popular particularly with people who have had little success procuring credit from banks.

What makes a SACCO different:

  1. The manner in which you save: SACCOs accumulate the savings and provide loans or invest in financial securities and/or real estate. Saving with a SACCO is different from a bank because:
    1. They are no charges attached to the savings
    2. A member cannot access their savings unless they terminate their membership or obtain credit
    3. The pay interest on your accumulated savings
  1. The way they provide credit: A member is allowed to borrow up to three times their savings, as long as they can provide collateral or get another member to give them a guarantee. 
  1. The investment projects they are involved in: SACCOs pull together their members’ savings and invest them in joint projects. SACCOs are generally development oriented as a result of having their roots in the cooperative movement. Usually, they invest in projects such as real estate that members can purchase at reduced rates.

SACCOs are important because:

  1. They encourage you to save

SACCOs require you to save consistently and this, in turn, enables you to cultivate the discipline of saving frequently.

  1. They are a sure investment

SACCOs pay out dividends on the savings of their members. Compared other investments, saving in a SACCO has a more guaranteed return.

  1. They have limited liability

Typically, the liabilities of the society members are limited to the amount of capital they contributed. Therefore, if the society goes bankrupt, the personal property of the members is safe.

  1. Emergency loans

Some SACCOs offer developmental and school fees loans that can be processed within a day, depending on the borrower’s urgency.

You should join a SACCO because it will come in handy when you need to get a line of credit. Most importantly, when you do need this line of credit, you will have access to some of the lowest interest rates in the country.

The interest rates charged by SACCOs are usually not subject to change. In fact, a majority of SACCOs lend at 12% annually, which is below anything banks have charged even when base rates were at their lowest. 

Do not wait for tomorrow, save now and try to save as much as you can in a SACCO. The benefits you will reap later in life are worth the effort it will take you today.

Are you a SACCO member? Have you considered joining one before? Please comment below and let us know.

Learn More:

  1. Advantages of saving money in a SACCO instead of banks in Kenya
  2. SACCOs play a significant role in Kenya


About the author

Wellington Ayugi

Wellington Ayugi handles Business Development at Covered and has a passion for personal finance, microfinance, and developments in financial technology