By Zeytuin Sharamo

Savings and credit co-operatives (Saccos)  are  a major   source of  funding   for   households  and organizations  in Kenya.   They  provide   credit for a wide range of purposes and on relatively very competitive  terms.  Significantly, this  credit  suits   a   category   of borrowers (  including  women  and  youth )  that is shunned  by  some mainstream  financiers  since they do not  possess collateral securities .

Going down memory lane

 Co-operatives were introduced in Africa as state projects in the 1950s and 60s.  Respective   governments  viewed   them   as mass organizations and instruments for the economic emancipation of the rural population. Nevertheless, the 1990 market liberalization  era  saw the collapse of  state-sponsored co-operatives in many   developing countries since they could not compete with the private sector.

 Recent research studies show that co-operatives in many developing countries are going through reincarnation. For instance, in 1995, there were only 554 registered co-operatives societies in Uganda. However,  recent research estimates that there are more than 7500 registered co-operatives societies in that country. Typically, in Kenya, the cooperative movement has been a powerful engine for socio-economic   development. It transcends almost all sectors of the Kenyan economy –  both formal and informal. Studies estimate that more than 63% of the population in Kenya either directly or indirectly participates in cooperative-based enterprises. It also shows that co-operatives contribute 35%  of  the  Gross National Savings, 46% of the total Gross Domestic Product (GDP)  and directly employ more than 500,000 people.


The first Sacco in Kenya was established by the Catholic Church through Father  Joachim Getonga in 1964 in Mariira,   in  the  then   Murang’a district. Three years later, a committee was formed to promote the development of  Saccos  in the country. It   led to the formation of two chapters: one in the pursuit of providing lobby, advocacy  and advisory services that protect the interest of the members.  It acted  as the principal local and interpretational representative and mouthpiece of all SACCOs and   promoted  the organization and development of viable Saccos. The union was faced with enormous challenges, particularly  lack of operational funds and understaffing which seriously limited its   operational capacity to execute the mandate. Nevertheless,  it   was able to  overcome   the challenges and at the same time, set up an elaborate system with country-wide outreach, serving over 3500 affiliate Saccos and establishing a Kshs.  10 billion asset base backed by more than  three hundred  employees. These accomplishments can be attributed to different reasons. They include :   unique ability in articulating issues at the core of cooperatives, combined with practical solutions in areas where the Saccos face daily challenges.

Kenya National Police DT Sacco National Chairman David Mategwa with staff and junior members celebrating the stellar achievement of being the second best society in the country during the 2022 Ushirika Day held at the KICC.

 Going digital

The onset and aftermath  of  the  Covid-19   pandemic  has  occasioned  the digitization  of  service delivery and product development  by many  financial  institutions – Saccos included. There are numerous reasons why SACCOs should be digitized. One of them is the  ever   changing customer needs and preferences. These days, the world  has become dynamic due  to technological  advancement.  Customers do not like wasting time  while  accessing  various  goods and services.   They believe in convenience  and efficiency.

It is essential to allow members of Saccos to access financial solutions   through their mobile phones, especially with the increased penetration of smartphones. Additionally,  small business owners are a significant  portion  of  the Saccos’ clientele.   They  need  financial partners  that can provide quality services and products  in order to enhance their growth.  Digitization of Saccos   is transforming the way they   operate by providing enhanced efficiency and cost savings. By making use of technologies such as mobile banking,  artificial intelligence (AI)  and cloud computing, Saccos can increase their productivity by annihilating the need for paper transactions and manual processing.

Digitization will also enable Saccos to provide excellent customer experience  and  real-time access to accounts’  information. When Saccos become well-organized, it minimizes unnecessary costs for them. Digitization has  helped  Saccos to reduce their risks and operational costs and focus on providing better products  and   services to their customers. The tool that comes with digitization can enable Saccos to track transactions in real-time and reduce paperwork which contributes to reducing extra costs.

 Digitization is also   an efficient way to leverage data analysis and insights for Saccos. By digitizing their operations, they can access real-time data analytics which   they can use to make the right decisions. This helps them to understand their customers better  and enhance their customer experience. Typically, this also provides a wide range of data that they can use to identify trends and make predictions. The information can be used to develop strategies  that assist  organization to meet its goals. With digitization, transaction records are easily accessible and updated in real time. Every member of the Sacco  would be able to view their accounts’ balances and the  history of their   transactions at any time.

Despite  the  fast growth  of Saccos  in Kenya, some of them  are still operating  using   manual systems.  Most  of  their   transactions are done manually and customers have to physically visit their  branches  in order  to   access financial products  and   services. This has been a notable challenge, especially for members who live in the  rural and  far  flung   areas. Furthermore, manual systems can be costly for these institutions and their respective   customers because of their limited efficiency.

Financial inclusion

 By and large,  the   digitization of Saccos in Kenya has created many   job opportunities as the said  institutions  bring on board  more members. Adopting digital systems helps Saccos to reach new members in remote areas and expand their reach.

 Advancement  in financial technology has  enabled Saccos to offer digital loans   and repayment systems. Financial technology  firms   provide  solutions   that allow Saccos to  instantly loan  their members. The members can also repay their loans digitally abrogating the need to physically visit the organization.

The use of Financial technology has not only enhanced the transparency in loan repayment and disbursement,  but it  has  also   enhanced   the efficiency of Saccos. By  embracing technology,  Saccos  are able   to offer their customers digital loans , money  transfer   services , deposits and  balance  enquiries among other services.

Many  Saccos  have also  automated   their loan underwriting and risk management processes, reducing the time taken in processing loan applications and increasing loan disbursement speed. This has come  in handy  as  they   endeavour  to  reach  the  under banked population  . Members can also track their loan applications, check their loan repayment schedules and receive notifications on their phones.

 Consolidating digitization has been essential in promoting financial inclusion in Kenya by allowing Saccos to offer digital financial services to their members. The more SACCOs embrace digital technology, the more Kenyans will have access to their  innovative  products  and  services,  hence building  their wealth and accelerating socio-economic  development.



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