By Zeytun Sharamo
Savings and credit co-operative societies ( Saccos) are member-based financial institutions. They operate on identity, principles and co-operate values that include : honesty, integrity, social responsibility and openness. Saccos provide financial services and products to their members who share a common interest such as labour unions, working for the same employer, belonging to the same social fraternity or profession and living in the same geographical areas among others . The main objective of establishing Saccos is to improve the socio-economic status of their members by providing them with innovative financial solutions.
Many people in the country have viable business ideas but they lack the financial capability to implement them. To achieve financial freedom, one of the best choices for an individual would be joining a Sacco. To start with, Saccos offer their members competitive interest rates on loans, and attractive interest rates for savings compared to other financial institutions.
A Sacco member is expected to maintain a certain amount of monthly savings even while paying off a loan. This helps the individual to accumulate a substantial base while building a savings discipline. Saccos also annually provide members with dividends on their deposits depending on how much profit they have made in a given financial year. The higher the deposits, the higher the dividends a member gets.
The Sacco Society Regulatory Authority ( SASRA) was established under section 4 of the Sacco Societies Act, 2008 of the laws of Kenya. Section 68 of the Act required the minister in charge of cooperatives to make specific guidelines for efficient implementation of the 2008 Act. Sacco Societies Regulations 2010 were operationalized on June 18th 2010 following gazettement, and SASRA became accountable for their implementation.
Deposit-taking Saccos licensing
Licensing of Saccos to undertake deposit-taking is specified under Section 24 of the Act and section 4 of the regulations. In addition, it is renewable annually. Section 69 of the Sacco Societies Act, 2008 indicates that, all deposit-taking Saccos were needed to apply for a license within 1 year from its publication date. Nevertheless, on account of Section 68 of the Act, this period was over in June 2011.
Categorization of Saccos in Kenya
A Sacco is an independent grouping of people who come together to meet their financial needs through a democratically controlled and jointly owned enterprise. A capital formulation is promoted by a Sacco through collecting deposits from individuals and groups. People can access the finances through credit facilities for investments and personal development. In Kenya, the first cooperative society was found in 1908. At the time, eligibility to join the cooperative was established along unique common bond linkages.
Adoption of the Cooperatives Society Act, Cap. 490, further consolidated Kenyan society’s distinctiveness. SASRA has grouped deposit taking Saccos according to their total assets. Grouping is essential because it estimates the risk within deposit taking Saccos contingent on the strength, opportunities and challenges associated with assets. This helps SASRA in determining the strengths and weaknesses of individual Sacco. A total of twenty one deposit-taking Saccos have been classified as tier one, each one of them having assets over Kshs. 5 billion. Tier two consists of fifty nine deposit-taking Saccos with assets worth between Kshs. 1 billion to 5 billion. Tier 3 consist of ninety four small-sized deposit-taking Saccos.
Top Saccos in Kenya
Stima Sacco was started in 1974 by only five employees of the then East African Power and lightening Company. Its fortunes have grown in leaps and bounds over the years and it is now a tier one Sacco with membership from various sectors of the economy. Its asset base is Kshs. 53.8 billion.
Kenya National Police DT Sacco
The Kenya National Police DT Sacco was established in 1972. With a countrywide footprint, it has immensely grown over time. It has an asset base of Kshs. 48.9 billion. The leading tier one Sacco has opened its common bond to civil servants, county government employees, professionals and members of the business community.
Mentor Sacco was started in 1976 by only three hundred teachers from the then Murang’a district. Before rebranding, the leading tier one sacco with an asset base of Kshs. 11.76 billion was known as Murang’a Teachers Savings and Credit Co-operative. With a robust digital platform and innovative product offering, Mentor Sacco has made major inroads in Murang’a, Kiambu, Nairobi and Kajiado counties.