Wednesday, March 22, 2023

Saccos in Kenya:  How to Identify a Genuine Savings Sacco

By Jane Muia

Saving is one of the sure ways to build wealth over time. In this case, saving means getting returns from your money.

Sometimes people fail to understand how money functions, which explains why many end up pilling money in their bank accounts for zero benefits. Pilling money in the bank is the same as burying them in the backyard because they are bringing no value.

Kenneth Muchina, the Chief Executive Officer (CEO) of Funguo Investment Limited, says savings that bring no additional return are not productive. As such, many money experts advocate for saving in Savings and Credit cooperatives (Saccos) and for a good reason. Unlike other financial institutions, Saccos offer members a way of accessing credit by allowing them to borrow up to three times against their savings.

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The amount that members contribute every month is used to provide loans to other members. By being a member of a Sacco, you are a shareholder. You earn a dividend as an owner and interest on deposits as a shareholder, unlike in banks where your savings are used to make profits for the institution but you end up getting zero profit.

Saccos have been in existence for years and have been lauded as priceless savings and credit extension avenues. These financial institutions have recently gained popularity, and many people are ready to multiply their finances.

For instance, Stima Sacco, which has an asset base of 53.8 billion shillings, surged its customers to 177,260 members at the end of 2022 from 6,886 members in 2006. Its loan book expanded from 2.2 billion shillings to 42 billion shillings during the period.

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This figure highlights that Kenyans are willing to save. And just like in any other business, every positive progress comes with numerous constraints. Scammers have realized Kenyans’ increasing appetite for saving and are now employing techniques to swindle money from Kenyans. They are introducing fake Saccos to lure Kenyans to save in them before vanishing with the unsuspecting members’ savings.

So how do you tell that a Sacco is genuine?

1. They have physical offices.

Imagine socking your money in an imaginary institution where you have no idea where to get it in an emergency. Before partying ways with your money, ensure it’s in a trusted institution with a physical appearance. According to Martin Kathurima, a Kenyan economist and a digital banking specialist, a Sacco that does not have a physical appearance is a red flag and should be avoided.

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2. They are registered and Licensed

All approved Saccos in Kenya are licensed and regulated by the Sacco Societies Regulatory Authority (SASRA). Before giving a nod to join a Sacco, visit its offices and investigate carefully. Ask them to present the registration and licensing documents. Any reputable Sacco will gladly display and offer these documents to you. Confirms that the documents presented to you are legitimate.

3. They hold AGMs

Unlike other financial institutions, Saccos hold Annual General Meetings (AGMs) to which all members are invited. Important decisions regarding their strategic directions are made during these AGMs. A Sacco that is opaque in its financials is definitely a red flag.

4. They offer membership training.

A Sacco should give its full information to members. This includes its dynamics and policies. Look at customer reviews, testimonials, and complaints on various services to judge Sacco’s operations.

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