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What is a SACCO? How it Works


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A SACCO, short for Savings and Credit Cooperative Organisation or Society, functions as a voluntary association where members regularly pool their savings. In turn, they gain access to loans for various purposes. The fundamental objective behind establishing SACCOs is to foster a culture of savings and facilitate credit availability to its members.

A cooperative society, be it a business organisation or a collective of individuals, forms based on voluntary association and equality, all aimed at advancing their economic interests. Much like consumer, transport, produce, and marketing cooperatives, SACCOs also fall under the financial cooperative umbrella.

Cooperatives, encompassing economic and social objectives, primarily operate as economic institutions. Their key focus is on achieving sustainability through successful business endeavours. SACCOs, within this cooperative framework, play a vital role in providing financial services that contribute to the economic welfare of their members.

Joining SACCO is a great way to save and secure a brighter financial future. In Kenya, where financial inclusion and access to affordable credit are crucial, SACCOs have emerged as game-changers for individuals and communities seeking financial empowerment. With their unique features and member-focused approach, SACCOs offer a compelling reason for everyone to consider joining.

SACCOs exemplify fundamental principles of cooperation, encompassing core values such as mutual assistance, social responsibility, and fostering a sense of community. These cooperative entities extend a spectrum of financial services to their members, emphasising savings and credit facilities. Membership eligibility is often contingent on shared interests or affiliations, be it residing in a common geographic area, belonging to the same labour union or professional association, working for a shared employer, or participating in a social fraternity or church community.

The overarching goal of SACCOs is to empower these diverse communities by providing easily accessible and customised financial solutions. Through this approach, SACCOs strive to align their services with the distinct needs and aspirations of their members, contributing to the economic well-being and social cohesion of the communities they serve.

In Kenya, becoming a member of a SACCO entails meeting specific eligibility criteria established by the SACCO itself. These criteria are designed to ensure that the services offered by the SACCO are accessible to individuals who share a common interest or bond.

Although the exact eligibility requirements may vary among different SACCOs, they generally encompass factors such as employment status, residence, or affiliation with a specific organisation or association. Prospective members initiate the joining process by submitting a membership application form provided by the SACCO. This form typically collects essential information including personal details, contact information, and any supporting documentation required by the SACCO, such as identification documents, proof of employment, or proof of residence.

Furthermore, individuals are often required to pay a one-time membership fee upon joining, the amount of which may vary among SACCOs. This fee is intended to cover administrative costs associated with processing the membership application and establishing the member’s account.

Considered as an investment, the membership fee grants individuals access to the comprehensive range of benefits and services provided by the SACCO. The eligibility requirements of SACCOs in Kenya aim to promote inclusivity and cater to the specific needs of individuals within defined communities or associations.

By tailoring their services to these groups, SACCOs play a pivotal role in influencing the financial well-being and economic development of their members. This targeted approach allows SACCOs to offer pertinent financial solutions, support local initiatives, and actively contribute to the growth and prosperity of the communities they serve.

The core of a SACCO’s operations revolves around the significance of savings. Members are mandated to make regular contributions, manifesting as either deposits into a designated savings account or the acquisition of shares within the SACCO. These contributions, pivotal for both individual members and SACCO financial stability and growth, remain dynamic and active.

SACCOs strategically utilise various mechanisms to leverage these savings, aiming to generate returns for their members. A primary avenue involves extending loans to members in need of financial support. The interest accrued from these loans is subsequently distributed among the members in the form of dividends or reinvested to enhance the SACCO’s service offerings.

Interest rates on savings are governed by SACCO policies, typically established by the board of directors and ratified by the general membership. While these rates differ among SACCOs, they generally remain competitive when compared to those offered by commercial banks. The SACCO strives to strike a balance, ensuring a reasonable return on members’ savings while safeguarding the financial sustainability of the organisation.
Interest earned on savings is typically computed based on the average daily balance of the member’s savings account or shares. This dynamic calculation encourages consistent contributions, resulting in incremental interest earnings. It forms a gratifying system that not only incentivizes saving but also fosters a long-term commitment among members to their financial well-being.


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