SACCOs are among the institutions that continue to register remarkable changes—and good ones, for that matter. Of course, the benefits of joining a SACCO in Kenya are not new. Since the formation of these institutions, they have been in existence and pretty much remain the same.
But up to a few decades ago, SACCOs were a preserve for government and corporate institution employees. Even more, you would have to forfeit your membership upon retirement. That is no longer the case. Anyone can now join a cooperative society, as long as you can save consistently. You do not have to be in mainstream employment to qualify for membership. Sounds great, right?
Joining a SACCO offers incredible benefits. They make perfect alternatives for those who find banks too limiting in loan conditions and the investment return on savings. Do due diligence before joining a cooperative society as there are several options to consider.
This article aims to focus on the merits of joining a SACCO. However, for starters, let us first look into what this animal is.
What Is A SACCO?
A SACCO can be generally defined as a member-based financial institution for people with similar goals and interests. It operates on cooperative principles enshrined in its vision, mission, motto, and core values Sacco membership offers a portion of equity in the Sacco through the acquisition of shares.
In a nutshell, it is a self-help organization where a group of people pile their savings and provide credit or loans to members. Often, SACCOs are pretty democratic and member-driven. Their overall goal is to alleviate poverty through training, a positive saving culture, and credit support.
Initially, members belonged to employees of particular institutions. This restriction is nonexistent today. You can now join a SACCO irrespective of your employment background or status, color, tribe or religion.
4 Benefits of Joining A SACCO
The will benefits in the following ways if you join a Savings and Credit Cooperative Organization;
1. Nurture a Saving Culture
Of all the advantages of advantages that come with joining a SACCO, nurturing a saving culture comes first. Kenyans are poor savers, with a 13% saving rate against Africa’s equally worrying average of 17%.
SACCOs aim to bridge this gap by instilling a healthier saving discipline. Most of them have a minimum monthly amount that each member must contribute in savings irrespective of whether one is servicing a loan or not.
2. Return on Investments or Dividends
How much in annual interest do you get from your bank savings? You do not have to answer. It could be nothing for an entire year. It could also be a disappointing figure that you feel pain discussing.
Interestingly, SACCOs consider members as owners or shareholders. Thus, they share all profits made from loans and other investments with their members. The amount in dividends you will get is dependent on the total amount of profits and the amount of your savings.
3. Limited Liability
Your liabilities as a member start and end with the capital or savings you have with the society. Thus, should a SACCO go bankrupt or experience a massive loss of funds, you do not have to worry about losing your other investment or stuff. All the same, these institutions are registered under the Cooperative Society Act and have insurance. Something will rarely go wrong.
4. Availability of Low-Interest Loans
Messages in that come after a declined loan application are pretty frustrating. Yet, they are synonymous with other credit institutions.
Fortunately, you will rarely receive them after a SACCO loan application, as long as you meet the requirements. SACCOs will provide you with a loan thrice or four times worth your savings. Besides, the loans attract lower interest rates compared to banks.