What is a SACCO?
What is a SACCO?
A SACCO is a financial cooperative formed for the purpose of pooling members’ savings and providing credit to them. It is a non-profit financial institution, and its aim is to meet the financial needs of the members. Members pool their savings deposits to finance their own loan portfolio.
Advantages of belonging to a SACCO
- Savings - SACCOs encourage a culture of saving and investing. As a member you are required to contribute a certain amount of money towards your savings.
- Loans - One of the most significant benefits of joining a SACCO is access to affordable credit. It is usually easier to secure a loan from a SACCO than from other financial institutions. SACCOs typically offer their members loans at competitive interest rates, which are often lower than those provided by traditional financial institutions. As a member you are entitled to getting a loan that is usually worth a certain number of times the value of your deposits. It could be three or four times depending on the SACCO by-laws.
- Financial Inclusion - SACCOs are committed to financial inclusion. They welcome members from diverse backgrounds, including those who may have limited access to mainstream financial services. Joining a SACCO provides an opportunity for individuals to become part of the formal financial sector.
- Dividend Earnings - SACCO members share in the profits through dividends and interest earnings. As the SACCO’s financial performance improves, members receive a portion of the returns. This additional income can contribute to financial stability and growth.
- Member-Centric Approach - SACCOs prioritize their members’ needs. Unlike larger financial institutions, SACCOs maintain a member-centric focus, tailoring their services to meet the unique requirements of their members. This personalized approach fosters a sense of community and belonging.
- Ownership and Control - Unlike traditional banks, SACCOs are owned and controlled by their members. Joining a SACCO means becoming a co-owner and having a say in the decision-making processes. Members elect a board of directors to oversee the SACCO’s operations, ensuring that the institution operates in the best interest of its members.