In Kenya it’s either you save your money in a SACCO, a Bank or purchase real property with your surplus cash.
Two decades ago, there were few banks in the country, those which existed only operated from major towns only.
This led to emergency of SACCOs in small towns to cater for the services of farmers and few individuals who wanted to save their little cash.
Over time, it has become increasingly important to have both SACCOs and Banks because people never trust their neighbors with money anymore. One worrying trend emerging from the Kenyan population, especially the middle class, is their desire to save in SACCOs than banks. There is something very important motivating them to save in the SACCOs.
Savings and Credit Cooperative Societies are important institutions in the country. One of the major reasons why most people prefer to save their money there is the huge amount of interests the money attracts. Since SACCOs are primarily not meant for posting huge profits, they do everything to make their customers happy. Once your money is in a savings bank in any SACCO, you are assured of making some cash out of it.
A friend of mine who has worked for Kenya Airways for 10 years was initially struggling to save money to buy a plot. After being initiated into Mwanda Ndege SACCO, he saved Ksh 200,000 for two years. Later, was given a loan of Ksh 700,000.He used the loan to buy a plot in Kamulu and is now building a house. What was amazing is that the loan was attracting interest rate of 1 % per month, which is son insignificant as compared to interest rates charged by local banks. Soon, he will be a proud owner of a home in Nairobi.
SACCOS also buy land and sell it cheaply to their members. This is one thing that makes many Kenyans proud. You might get a SACCO selling a plot in Kitengela to its members at Ksh 150,000 and if you move 10 meters from the location, you will be shocked to find an individual selling a plot similar to the one owned by the SACCO at Ksh 500,000.
In 2010, one of my colleagues joined a SACCO in Nairobi. He started buying sharing worth Ksh 5,000 every month. Today, he has over shares worth over Ksh 300,000 in the SACCO. He is a happy man because each year he is assured of Christmas from the SACCO in terms of dividends. Unlike banks where shares trade at prices which ordinary Kenyan is unable to buy, shares from SACCOs are always affordable.
It’s very hard for Kenyan SACCOs to make losses. Once you have your money in a SACCO, you are assured that it’s safe and chances of making losses are minimal. I have witnessed several banks closing down because of being declared insolvent, but never have I witnessed a SACCO in Kenya going through receivership or failing to meet members’ targets.
SACCOS like Ushuru, Stima,and Harambee have grown so big that they’re threatening the existence of banks in the country.