Savings and Credit Cooperative Organizations (SACCOs) have long been a cornerstone of Kenya’s financial landscape. SACCOs are not really new in the investment space because SACCOs and banks have a long history in Kenya. SACCOs started way back in the pre-independence era.

Early beginnings of SACCOs in Kenya

In fact, the earliest SACCOs were mostly in the central Kenya highlands and the Rift Valley. These were basically farmer-based SACCOs.

For instance, the KCC, that is Kenya Co-operative Creameries, was one of the earlier SACCOs, and of course, the Kenya Planters and Coffee Union, some of the earlier SACCOs, started way back in the 1920s.

There were also some small farmer SACCOs like the Lumbwa Valley SACCO. Long ago, these were the SACCOs that laid the roots for the SACCO movement in Kenya.

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The SACCO sector was regulated or formalized after Kenya attained independence in 1963. That’s when the SACCOs came together and established the Co-operative Bank of Kenya, as you know it.

The Co-operative Bank of Kenya is the formation of the SACCO movement, founded in 1966.

Collaborations with financial institutions

So that’s the symbiotic relationship between the SACCO movement and the Co-operative Bank of Kenya. You’ll find that it’s kind of a partnership, where the Co-operative Bank of Kenya offers check clearance services, as a clearing service for checks emanating from SACCO to SACCO—and SACCOs also bank with the Co-operative Bank.

The SACCOs in Kenya are currently in advanced stages of establishing their own clearinghouse for checks. Through that relationship, you’ll find that SACCOs also act as grassroots agents for the Co-operative Bank.

The SACCO movement also has a close relationship with CIC Insurance because CIC is also a formation of the SACCO movement—Cooperative Insurance Company (CIC). SACCOs offer bancassurance for CIC Insurance.

Membership benefits and financial returns

Membership in a SACCO comes with a host of benefits. As a member, you enjoy interest on deposits and dividends on share capital. Some communications show dividends credited in amounts reaching up to KSh 1,143,895. Such messages are sent typically after the annual delegates’ meeting, when SACCOs ratify payments for dividends and interest.

There are cases of some members receiving dividends as high as KSh 1,143,895 in one payout, and in certain instances, members with substantial investments have seen their combined share capital and member deposits reach figures around KSh 10 million.

How to become a SACCO member in Kenya

To become a member, you pay a joining fee, buy share capital, and sign up for the BOSA account—Back Office Savings Account—where your contributions, which are non-withdrawable, build your deposit base.

These deposits determine your loan multiplier; for example, saving KSh 500,000 in a SACCO could get you a loan of up to three or four times that amount. Many SACCOs now allow up to four times the savings, meaning you could be extended a KSh 2 million loan.

SACCOs may impose a minimum amount of share capital, typically ranging from KSh 20,000 to KSh 50,000, though there’s essentially no cap on the total issued share capital. Unlike listed companies, SACCOs let you purchase shares directly from the cooperative, which means new members can buy share capital without going through a secondary market.

Wealth creation through SACCOs is a significant draw. When you deposit funds and reinvest interest, even a modest contribution—say KSh 5,000 monthly—can, over time, morph into substantial portfolio income through the power of compound interest. Many members also benefit from dividend advances, which allow them to access up to 50 percent of their expected annual dividends in advance.

For instance, if you earn KSh 40,000 in dividends, you might receive an advance of KSh 20,000, subject to a small one-off deduction. However, these advances do not earn additional interest, which is why members are encouraged to reinvest their dividends to maximize long-term returns.

On the operational side, SACCOs use the pro-rata method for calculating interest. Much like money market funds, the amount deposited earlier in the month earns more interest than deposits made later because of the longer investment period. This method ensures fairness and accuracy in interest calculations for all members.

The SACCO landscape in Kenya is as diverse as it is historic. We have savings and credit SACCOs—the majority that conduct the core business of mopping up savings and lending to their members.

Then there are housing and real estate cooperatives, which focus on saving towards housing schemes or purchasing plots. Alongside these, some SACCOs have investment arms that, since 2010, have been mandated to register as investment cooperatives under the Ministry of Cooperatives.

This shift was designed to regulate non-core functions like running colleges, engaging in real estate, or operating driving schools. Examples include established SACCOs that have since rebranded or adjusted their operational mandates.

KUSCCO  scandal

Despite the solid framework, challenges do exist. The KUSCCO scandal, where over KSh 13 billion was lost, which has stirred conversations on social media and in mainstream media, has raised concerns about the exposure of SACCOs to risky investments. With some SACCOs having significant amounts invested in KUSCCO—(Stima Sacco had close to half a billion in Kusco)—questions arise about the safety of members’ life savings.

Officials are actively involved in court cases, and there is an ongoing call for SACCOs to disclose their full exposure to such risks. These issues, however, are bound to emerge with time and are being closely monitored by regulators.

Kenya is the leading country in the SACCO movement in Africa. With over KSh 1 trillion in fixed and liquid assets and about 200 active SACCOs, these cooperatives continue to empower various professional groups—from farmers and teachers to police officers and bankers.

SACCOs are not just financial institutions; they are community pillars, offering financial inclusion, wealth creation, and a trusted system for managing life savings in an ever-evolving economic landscape.