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Top 5 Reasons to Join a Sacco Before 2022 Ends
Top 5 Reasons to Join a Sacco Before 2022 Ends
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Top 5 Reasons to Join a Sacco Before 2022 Ends

Farah Nurow
November 18, 2022

Are you thinking of joining a Sacco? 

Saccos are one of the most popular financial institutions, and they've been around for over a century. The first one was formed by European settlers back in 1908. Their objectives have remained the same since then: to pull members' resources together and invest them in beneficial ways. In the process, they economically lift each other up.

Savings and Credit Cooperatives, or simply Saccos, are member-based organisations that offer various financial services to their members. When they started, membership was restricted to people sharing a similar link like an employer, religious belief, or living in the same town. But they have since modernised, and membership is open to everyone willing to buy shares or invest money in them.

There are many instruments to choose from when it comes to investing and saving money. But one that many Kenyans seem to prefer is Saccos. And that begs the question, why?

This article will answer that by exploring five reasons you need to join a Sacco today. Read on.

Read Also: Saccos in Kenya: To Join or Not? 

To Improve Your Saving Culture

Saving money is hard. It requires commitment and willpower. And when you don't have a target or a goal, it gets more complicated. Saccos can help you improve your saving culture and ensure you always put away a percentage of your income for future use. It does this by offering two important advantages over other saving vehicles:

Saving Discipline: Most Saccos require you to save a minimum amount every month. This encourages members to adopt the habit of paying themselves first. Since this is a mandatory requirement, it will help you save money every month.

Automatic Savings: Some Saccos can partner with your employer to offer payroll deductions. Every month, your employer will deduct a portion of your salary and deposit it in your Sacco. By the time you receive your payslip, you've already committed money to your savings account.

Illiquid: Unlike other saving vehicles like a bank or MMFs, accessing your savings in a Sacco is hard. While this can be inconvenient in times of emergencies, it can prevent you from digging into your savings every time you need to spend money unnecessarily.

Read Also: 9 Common Mistakes People Make While Trying to Save

High Returns on Savings

Bank savings accounts, fixed deposits, MMFs, treasury bonds, and bills all have one thing in common– they only pay interest. Saccos can offer different types of returns compared to those instruments. Given their high return, they can be a suitable place to park money if you don't know your saving objectives or are saving for a long-term goal.

Saccos can grow your money in three ways:

Paying Dividends: Depending on how a Sacco performed in a given financial year, you can earn attractive dividends on the shares you own.

Paying Interest: If you save your money in a deposit accepting Saccos, it will grow your money at above inflation rates by offering attractive interest.

Appreciation: The value of the Sacco shares you own can increase, especially if the Sacco is performing well. When you want out, you can sell your shares for a higher price than you bought them.

Read Also: How to Build Wealth in Kenya Using Saccos 

To Access Cheaper Credit

One of the main objectives of Saccos is to offer members a way of accessing credit by allowing them to borrow up to three times against their savings. The amount that members contribute every month is used to provide loans to other members. In turn, the debtor is charged interest that is distributed among members.

Unlike other financial institutions, Sacco members decide on the interest rate to charge borrowers at their annual general meeting. The rate is kept low to encourage all members to borrow in order to uplift themselves and provide the Sacco with a way to generate profit. 

Saccos also offer different types of loans with different rates and terms. They have emergency and salary advance loans, which can quickly be processed and approved within a day, education loans to help members educate their children, personal loans, etc. 

To be eligible for credit, most Saccos require that you must have been a member for a specific period (usually three months) and have guarantors when borrowing more than your savings. However, some Saccos will lend you without guarantors if you put up collateral.

Read Also: Stuck in a Debt Cycle? Here Are 6 Tips to Help You Break Away

To Access Investment Opportunities

One of the significant advantages Saccos have over other financial institutions is that they provide investment opportunities that help alleviate members from poverty to economic success. And this perhaps explains the wide acceptance of Saccos in Kenya.

When Collins, 25, recently travelled upcountry to visit his parent, he struck up a personal finance discussion with them. One of the topics stunned Collins Saccos and how his parents leveraged this saving instrument to grow their investments. Collins's parents were able to invest in various investment schemes their Sacco provided.

Collins was surprised to learn that the three matatus his parents own, the rental properties, their retirement home, and the farm, were all courtesy of their Sacco. Until then, he had always considered Saccos as a bank for the unbanked. But Collins was sold after learning of the investment opportunities they offer members. He immediately joined a Sacco!

Read Also: Saccos vs. MMFs: Which One Should I Choose?

Saccos are Much Better than Chamas

Saccos and chamas are member-driven financial groups formed to empower individuals and improve their lives. However, chamas rarely achieve this fit, making Saccos the better alternative. And there are reasons for that:

  1. Chamas lack longevity - Without clear goals, most chamas die after a few years. This is because they lack long-term strategies that can help uplift members. If, for instance, you want to build your creditworthiness to afford a mortgage, you are better off joining a Sacco and graduating from a Chama.
  2. Lack of Oversight in Chamas - Unlike Saccos which the Sacco Societies Regulatory Authority (SASRA)regulates, chamas can operate without any oversight. While you can register your Chama, most are informal and are built on trust. Trust that is often broken leads to members losing money.
  3. Chamas don't have operating rules - With no written guidelines, some members can skip making contributions or go missing after receiving money when it's their turn on the merry-go-round. There are no penalties when a member delays contributing either. 

This lack of rules also can cause a lack of transparency and poor leadership, which leads to the untimely death of chamas. However, when managed well, chamas can be beneficial to members.

Read Also: Factors to Consider Before Joining a Sacco in 2021 


While Saccos can offer you amazing benefits, you should do enough research before joining one. Carefully choose the Sacco you want to join to ensure they provide services aligned with your financial needs. You can do this by looking at their investment portfolio and the opportunities they offer.  

Second, look at the Sacco's reputation. Do they have a taint on their history that may be delaying dividend payments or losing members' money? Only join a Sacco that is well managed and has members' interests at heart. And ensure they're registered with the regulatory body.

Finally, If you plan to borrow from a Sacco in the future and don't have collateral, you should consider joining a Sacco that your family or friends use. This is because Saccos require guarantors, and strangers will likely not cosign a loan for you. Without guarantors, you will have a harder time getting credit or access to investment opportunities.

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Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.

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