Saccos: Towards Sustainable Development

Mr. Simon Chelugui, Cabinet Secretary for Co-operatives and Micro, Small and Medium Enterprises welcoming President William Ruto during the 101st Ushirika Day Celebrations at the Kenyatta International Convention Centre in Nairobi. photo/Courtesy

They have been at the forefront supporting sustainable development through the provision of flexible and affordable financing solutions

In Kenya, the co-operative movement has taken shape. It dates back to the 20th century when the first co-operative society was formed by the Europeans farmers. Christened Lumbwa Co-operative Society, its aim was to purchase farm inputs and market members’ produce by taking advantage of economies of scale. Subsequently, other co-operatives were formed by African smallholder farmers who were allowed to register and promote their own organizations. Most of the organizations were for agricultural produce like tea, coffee, cotton and pyrethrum. As at independence, there were about 1000 co-operative societies with membership of over 350,000.

Co-operatives have continued to play an important role in the current time by improving livelihood and guaranteeing sustainable development. They do this by encouraging savings, providing affordable and flexible loans and credit facilities, as well as offering financial literacy. Majority have restructured and moved away from common bond and welcoming members from different sectors including salaried individuals, the business community and farmers among others.

By preaching the empowerment agenda and targeting individuals at the grassroots level, co-operatives have attracted a sizeable number of Kenyans and created numerous economic opportunities. Furthermore, their democratic nature is notable in encouraging people to take charge of their financial destiny.

Kenya prides itself in having the most vibrant and progressive co-operative societies in the region. Geographically distributed across the country, they range from savings and credit co-operatives in the urban areas, to agricultural and livestock societies in rural areas. It is worth noting that most Kenyans, especially the mass market, have embraced the co-operative movement and this has increased financial accessibility.


Since the introduction of Savings and Credit Co-operative Societies (SACCOs), the sector has been instrumental in driving the country’s economy through micro, small and medium enterprise (MSMEs). This is to an extent that the sector has been identified by the government as an essential pillar towards to realization of a middle-income economy by 2030.

According to reports by Sacco Societies Regulatory Authority (SASRA), Saccos’ role as a convenient medium for savings and credit facilities is notable. In fact, Saccos came at a time when most Kenyans were unbanked and accessing credit facilities from the mainstream banks was a pipedream. They also came with the concept of providing financial literacy to members on matters finances and innovating products and services suited to their immediate needs. The result was increase in co-operative societies and membership over the years.

The policy measures by the government to promote a strong and viable sector have also led to the growth in membership. For instance, the legislation of the Sacco Societies Act 2008 saw the implementation of SASRA in 2009 as the regulator. The move brought the sector under a legal, regulatory and supervisory framework. The result heightened Kenyans belief and confidence in the Saccos’ services.

Through SASRA legislation, Saccos are required to embrace capital adequacy requirements with the aim of securing members’ savings and cushioning them against risks. The requirements are also meant to increase the resilience of the Saccos and cushion them against failure or closure due to economic pressures. 

Moreover, the Kenya Union of Savings and Credit Co-operatives (KUSCCO) was formed in 1973 to act as a local and international representative of Saccos in the country. The need to form the association was informed by the many challenges experienced by Saccos during their formative years. KUSCCO was therefore mandated to act as an umbrella body catering for the welfare of all societies to ensure their survival. Over the years, the organization as well as the Kenya co-operative movement has grown in leaps and bounds to gain critical commendation.

Ardhi Sacco marketing manager welcomes President William Ruto at Ardi Sacco exhibition booth during the 101st Ushirika Day Celebrations at the Kenyatta International Convention Centre in Nairobi. Photo/courtesy


Becoming a member of a Sacco can offer several benefits, which vary depending on the specific Sacco and its policies. Here are some potential benefits of becoming a Sacco member:

Access to Financial Services: Saccos offer a range of financial services, such as savings accounts, fixed deposits, and loans. Being a member allows you to access these services, which can help you manage your finances more effectively. The services are flexible and affordable, and members have a pool to choose that which best suits their financial goals and needs.

Lower Loan Interest Rates: Saccos typically offer loans at competitive interest rates, which are often lower than those of commercial banks. This can save you money when you need to borrow funds for various purposes, such as education, home improvement, or emergencies. Moreover, Saccos offer higher interest rates on savings and fixed deposit accounts.

Financial Education: Many Saccos offer financial literacy and education programs to their members. These programs can help you improve your financial knowledge and make informed decisions about saving and investing. Many members, especially from the informal sector and rural areas have benefited from the educational programs offered helping them to better manage their cash flows, and differentiate capital from profits. This helps in keeping their businesses afloat.

Insurance Services: Some Saccos offer insurance products, such as life insurance or health insurance, to provide additional financial protection for their members. Loans taken from a Sacco are also insured. It means that upon the death of a member, his or her family members are not required to settle any outstanding debt with the respective Sacco.

Dividends and Profit Sharing: Depending on the Sacco’s financial performance, members may receive dividends or a share of the profits generated by the cooperative.

Community Support: Saccos often focus on serving specific communities or groups of people, such as employees of a particular company, members of a profession, or residents of a specific area. This can foster a sense of community and mutual support among members. Besides, they promote social cohesion and community support by organizing events and activities for members, which can contribute to a sense of belonging.

Economic Development

There is no doubt that Saccos have played a major role in ensuring sustainable economic development. The legal requirements for instance have ensured that Saccos are managed prudentially and are financially sound in a bid to promote development, particularly at the subsistence level. They are in tandem with the United Nations General Assembly declaration of 2012 as the International Year of Co-operatives. The declaration was an acknowledgement of the fundamental role played by co-operatives in promoting the social and economic development in the world.

According to studies, Saccos play an important role in the development of Kenya’s economy. The government’s vision 2030 blueprint shows that the sector has been identified as an important pillar towards realization of a middle income economy. The societies have been instrumental in supporting sustainable development through poverty eradication, particularly at the grassroots level, and creation and securing of livelihoods.

The beauty of societies is that they dive deep in the rural areas and informal sectors encouraging individuals as well as groups to become members. Through this, we have seen the transformation they are making through their innovative products such as smart agriculture loans products, which have encouraged many youths to consider farming as an income generating activity. By and large, co-operative societies have a significant role in sustaining enterprise development through employment creation.