SACCOS: AN EASY AND EFFICIENT METHOD OF SAVING MONEY

 

When it comes to using one’s salary or income, unfortunately, the pressing needs such as rent money, servicing loans, support to family, and utility bills usually take precedence over saving. However, it is important to save for a rainy day, and while there are many ways of doing so, I have found that SACCOs are one of the best ways to keep some money somewhere it can be easily accessed.

A SACCO is a Savings and Credit Cooperative. Kenya leads in SACCOs in Africa, according to a 2022 World Council of Credit Unions Report.

Top 10 Investment SACCOs in Kenya

Unaitas SACCO.

Kenya Police SACCO.

Stima SACCO.

K-Unity SACCO.

Waumini SACCO.

Maisha Bora SACCO.

Hazina SACCO.

Wanandege SACCO.

My story of joining my workplace SACCO is actually a bit convoluted. After around six months of employment at my new workplace, when I used to spend my money as fast as I could earn it, I was finally cajoled into joining the job Sacco. I was very skeptical at first and naturally was averse to sending any amount of money to any institution, with rent, transport, and HELB repayments damaging my bank account balance enough as it were. However, after nearly a year of contributions, I have become a convert, and will gladly sing the benefits of saccos to anyone who cares to listen.

 Saccos (Savings and Credit Cooperatives) are widely popular in this part of Africa, with many people who are gainfully employed being part of one. According to sofkenya.com, Saccos in Kenya – List of Registered Saccos in Kenya, there are over 3,900 active registered SACCOs in Kenya, with them accounting for “60, 64, and 63 percent of the African continent’s savings, loan and assets, respectively.” Almost 4,000,000 Kenyans are registered members of Saccos.

The working of a Sacco is very simple: you save a certain amount of money per month, and after some time you can take a loan of up to three times your savings at very minimal interest. In addition, many saccos give their members a dividend after the financial year, commensurate with how much they have saved.

Saccos are very beneficial in many ways. Firstly, they are very easy to join. Many saccos are formed by people who are close to one another, either being work colleagues, communing at the same church, or living in the same neighborhood. With virtually no restrictions in terms of age, financial status, creditworthiness or lifestyle, Saccos will accept anyone who is willing to send a monthly contribution. All I had to do was to fill out my bank details as well as a copy of my pay slip, and how much money I wanted to contribute per month, and I was set.

Leaving a Sacco is a little more complicated than joining one, however. One needs to write an official letter to the Sacco explaining their reasons for wanting to leave, and then wait for a period of usually a couple of months, after which all their savings will be returned to them.

In addition, saccos offer loans at very fair prices. In a country like Kenya, where many mainstream banks will charge interest on loans up to 18%, loans are out of reach for many people. Saccos have very small overheads, and hence their loans are very affordable. One can take up to three times their savings, while indicating how much money they would like to repay per month. One does not need to provide much in terms of collateral, for many Saccos a simple guarantee from a fellow member will be enough to get a loan.

Some saccos go ahead to offer some special seminars on financial management skills and knowledge to their members. One can also get great advice from fellow members on saving and investment tactics.

Saccos are widely praised for their democratic nature. The board of management is usually elected by the members, and they then look for the professionals to run the day-to-day activities of the Sacco. The board will then be accountable to the members in terms of such policies as how much dividend to pay, how one can join the Sacco, and how much money one can get in terms of emergencies. Having such a powerful say in one’s financial issues is very beneficial. This is because silly investment decisions can be shot down by members, leaving one’s financial well-being in rude health.

Saccos also helps by giving people a dividend of their savings after the end of each year. This infusion of cash can be quite helpful, and it also motivates the members to save even bigger amounts of cash.

There are of course some downsides to saccos, firstly being that they will not avail massive loans in the millions of Kenyan shillings to their members. Saccos are limited to the amount the members have contributed, hence if you are interested in getting a massive loan, and then a bank remains your best bet. In addition, since many saccos will limit the amount one can borrow pegged on three times their savings, one needs to have saved for a substantial period before asking for money. I faced this challenge when I went to my Sacco to ask for a loan, and since I had only accumulated ksh 7,000 I only got a loan of 21,000 Kenyan shillings. Hence, for emergencies, saccos may not provide one with the optimum amount needed.

The biggest disadvantage of SACCOs comes from mismanagement of members’ savings and contributions. There abound many sad tales of SACCOs who went down as directors fleeced the accounts, and many people lost their savings. It is important to be very careful when joining a Sacco, always choose the safest, biggest, and most trustworthy. In addition, robust governmental regulations are necessary to ensure that only the best SACCOs survive, by weaning out the ones that flagrantly abuse the law.

In a nutshell, I have really benefitted from being a member of two SACCOs: one at the job, and the other with my local church. I can save money for my projects, have enough for a rainy day, and enjoy my yearly dividend which comes at an opportune time; in the month of Njaanuary! It is a great option for any young person out there who wants to save money in a relatively risk-free money.