By Joseph Macharia

Savings and credit co-operative societies (Saccos) are emerging as the most preferred savings vehicles for most Kenyans. Chances are if you are a member of a Sacco probably you have heard  practitioners   in that   space mention  BOSA  and  FOSA  players. What do these terms really mean and what distinguishes them?

First things first, members of a Sacco are required to save a stipulated minimum monthly contribution. Some savings are withdrawable and others are non-withdrawable. Knowing the differences between the two will help equip you to choose one that aligns with your financial needs. Not all Saccos offer BOSA services though.


BOSA stands for back office services activities which relate  to non-withdrawable savings  used as collateral for loans. On the other hand,  members of   the  Saccos  with  FOSA ( front office services activity ) are able to open and operate accounts just like in commercial  banks . FOSA however is not a clearing agent with the Central Bank of Kenya (CBK).

With a FOSA account you can access a variety of services including: accessing disbursed loans, making   loan repayments,  placing   standing orders for loans and savings payment as well as   receiving   salaries  and  dividends. Additionally, a member can access withdrawable FOSA deposits whenever he or she is in need.

In BOSA, members remit prescribed non-withdrawable savings on a monthly basis. Here, you cannot withdraw your savings anytime. BOSA savings are locked until the time a member wishes to exit or cease being a member of a Sacco.

That notwithstanding, a BOSA account has its benefits.    To start with, it is an ideal way to save for retirement while you earn dividends every year on your non-withdrawable deposits. If you have a long-term savings  horizon and require a lump sum at the end of the saving period, BOSA is the perfect product for you.

Front office service activity (FOSA) account is a transactional account offering banking services similar to those offered by mainstream banks. Through FOSA, members are able to withdraw their savings while continuing to be members of their Sacco. So with FOSA account you can deposit and withdraw your savings anytime over the counter, automated teller machines (ATMs) or mobile banking apps.

Unlike in BOSA where a member is required to make monthly contributions, FOSA accounts do not have minimum monthly contribution. For members who want to maintain a steady cash flow, FOSA comes as the best option. Granted, FOSA accounts suit  members in businesses who are in need of   good cash flows. Remarkably, with a FOSA account,  you can transact from anywhere; even members who are abroad can still transact.


On the credit front, BOSA allows you to borrow  three  to  four   times against you savings (depending with the Sacco’s by-laws). Getting loans is easier with BOSA account, since the non-withdrawable savings  are   used as collateral.

On the other hand, FOSA mainly extends loans to members who receive salaries through their FOSA accounts. FOSA accounts can have salary advances for employed members. Various Saccos have different criteria that they apply before advancing FOSA loans. Among the factors they consider are: membership period, savings activity and credit rating. As such, to qualify for FOSA loans is a little bit harder compared to BOSA loans.

Debt clearance

 Members cannot use BOSA savings to clear loans except in case of a default . On the contrary, a member can channel FOSA savings to clear BOSA loans or even to increase BOSA savings. As aforementioned, FOSA accounts  are ideal   for members looking to have liquid savings accounts . Beneficiaries on FOSA and BOSA accounts are the same.

BOSA and FOSA services present convenient and affordable savings avenues  that meet   individual needs of members. Both complement each other and are to be used to benefit members. It is not unlikely that all members can have similar needs at the same time; therefore BOSA and FOSA allow members to choose the most suitable savings  and loan products.



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