The Rise of SACCOs in Kenya

The Rise of SACCOs in Kenya
Mr. Simon Chelugui, Cabinet Secretary for Co-operatives and Micro,Small and Medium Enterprises.

The SACCO (Savings and Credit Cooperative) industry in Kenya has experienced significant growth and has become a vital part of the country’s financial sector. SACCOs are member-owned financial cooperatives that provide savings and credit services to their members.

SACCOs in Kenya have a long history, when they were initially established to provide financial services to individuals who were unable to access formal banking institutions. Over the years, SACCOs have grown in number and size, and today they play a crucial role in the economy, particularly in serving the needs of the low and middle-income earners.

Various factors have contributed to the growth of the SACCO industry in Kenya in the recent time. They include:

Historical Background: SACCOs have a long history in Kenya, dating back to the early 20th century. Initially, they were established to meet the financial needs of small-scale farmers and workers in various sectors. Over time, SACCOs have evolved and expanded their services to cater to a broader range of members.

Legislation and Regulation: The Kenyan government has played a crucial role in promoting and regulating the SACCO industry. The SACCO Societies Act, enacted in 2008, provides a legal framework for the establishment, registration, and operation of SACCOs. The Act ensures transparency, accountability, and sound governance within the sector.

Membership and Structure: SACCOs operate on a cooperative principle, where members pool their savings to create a common fund. Members benefit from access to affordable credit, savings facilities, and other financial services. SACCOs are typically organized based on specific sectors or common bonds, such as employees of a particular company, professionals, or residents of a specific region.

Growth and Outreach: The SACCO industry in Kenya has experienced rapid growth in recent years. SACCOs have expanded their membership base, reaching a diverse range of individuals, including employees in both the formal and informal sectors. This growth is attributed to the trust and confidence members have in the cooperative model, as well as the need for accessible and affordable financial services.

Financial Services: SACCOs offer a wide range of financial services to their members, including savings accounts, fixed deposits, loans, insurance products, and investment opportunities. SACCO loans are often more accessible and affordable compared to traditional banking institutions, making them particularly attractive to individuals with limited access to formal credit.

Technology and Innovation: The SACCO industry in Kenya has embraced technological advancements to enhance its services and reach. Many SACCOs have adopted digital platforms and mobile banking solutions, allowing members to access their accounts, make transactions, and apply for loans conveniently. This technological integration has improved efficiency, reduced operational costs, and expanded the industry’s outreach.

Government Support: The Kenyan government has recognized the important role of SACCOs in driving financial inclusion and economic growth. It has supported the sector through various initiatives, including financial literacy programs, capacity building, and access to funds for onward lending. Additionally, government employees are required to join SACCOs as a way to promote saving and access to credit.

Overall, the SACCO industry in Kenya has experienced remarkable growth and has become an integral part of the country’s financial landscape. SACCOs have provided financial inclusion to many Kenyans, particularly those in the informal sector, and have played a crucial role in mobilizing savings and providing affordable credit to their members.