SACCOs, Savings and Credit Co-Operative Organizations, have grown over the past few decades and are giving banks a run for their money. The first advice you’ll probably get when you land your first job is “save”. And, a SACCO is probably the saving vehicle many will recommend. So, why are SACCO’s gaining so much popularity in Kenya? Are they worth putting your money in, or should you be worried?

Many advocates for using SACCOs as savings, borrowing, and investment avenue. But when it comes to your money, you should take every advice with a pinch of salt. Every product in the market has its pros and cons, including SACCOs.

Pros of Joining a SACCO

Encourages saving – to earn dividends and be able to borrow, you will need to be consistent with your savings. For this, you are pushed to be consistent with your savings.

Higher dividends – SACCOs earn you a higher dividend at the year compared to fixing the money in a traditional bank account. While banks offer a rate of less than 5% for fixed accounts, SACCOs offer as high as 10% to 14%. The rate of dividends varies from one SACCO to another and depends on the performance for that year.

Access to emergency loans – most SACCO’s have emergency loans that are usually processed within 48 hours or less. These range from school fees loans to development loans, depending on your urgency. I started saving with one of the SACCOs back home when I was in campus. During my last semester, my HELB loan got delayed, and I did not have enough money to cover for the whole tuition. I just borrowed from the SACCO and the money was processed in no time, and I managed to pay for my school fees.

Higher borrowing amounts – with most SACCO’s, you can borrow 3-times your savings. For example, if your savings are Kes 100,000, you can borrow up to Kes 300,000.

Lower interest rates – even with the lending base for banks, SACCO’s still has lower lending rates compared to banks. SACCOs have rates as low as 8% per annum, while banks charge about 14%.

Limited liability – your liability as a SACCO member is limited, meaning your private property as a member is out of bounds in case the SACCO goes bankrupt.

Cons of joining a SACCO

Guarantors – when it comes to borrowing money from a SACCO, you will require guarantors, who also need to be members of the SACCO. That’s where it gets tricky because you have to join the same SACCO as people close to you so you can be each other’s guarantors. Also, if you are someone’s guarantor and they are not able to pay the money back, the SACCO will come after you and your savings to recoup their money back. 

Collateral – these assets that you pledge to the lender, SACCO in this case, as security when borrowing. If you are not able to service your loan, the SACCO will come after the assets you pledged as collateral. It could lead to losing properties like land. 

Savings withdrawal – you cannot withdraw your share capital savings unless you want to withdraw membership from the SACCO. If you need money, you have to take a loan. The silver lining to this is some SACCOs have the FOSA (Front Office Services Activities) accounts where you can deposit and withdraw money at any time. However, the money in a FOSA account will not earn you the same high interest as any money saved in a share capital account.

Limited borrowing amounts – banks have billions at their disposal, which makes it easy for customers to borrow money in millions. SACCOs, on the other hand, have lower resources and it is not easy to borrow such an amount of money. 

Thievery and poor management – many savers have lost millions of money through poor management and thievery through SACCOs.

What to consider when joining a SACCO

As mentioned earlier, many savers have lost their hard-earned money through mismanagement and thievery in SACCOs. It is not a guarantee that the SACCO you join is safe, but there are some factors to consider when looking for a SACCO to join. It might help reduce the chances of joining a SACCO that will mismanage or steal your money.

  1. SASRA registration – ensure that the SACCO you are joining is registered by the SACCO Societies Regulatory Authority (SASRA). The organization is under the Industrialization and Enterprise Development Ministry and is in charge of registering and overseeing all SACCOs in the country. 
  2. How long the SACCO has been in existence
  3. The asset base of the SACCO
  4. The minimum share capital 
  5. Membership growth 
  6. Minimum monthly contributions 
  7. Available product mix- loans, savings & investments 
  8. Guarantors requirements 
  9. Borrowing terms and limits 
  10. Interest rates on loans
  11. Dividend/Rebate payments 
  12. Composition on board- (Central management committee)

Joining a SACCO is an excellent way to start saving the little that you can. It also gives you a chance to borrow money that you can use for your investments or any emergencies. However, you need to be careful when choosing a SACCO to join to avoid losing your money through a mismanaged SACCO or cons.



  • Marlow marion

    August 19, 2020

    Informative! Having joined a sacco this year, I must say I didn’t know the pros and cons or just what to consider. I am gonna research on my sacco and decide my way forward. Thank you!


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