Top Saccos in Kenya: The popularity of Saccos in Kenya is growing at breakneck speed. More people are embracing Saccos as alternative sources of loans and dividends. “I save my money through Sacco. I save through check offs which earn me good dividends at the end of every financial year,” says Michelle Langat. By saving through a Sacco, Michelle is able to access loans that she guarantees using her own savings. In addition, she is allowed to access loans that are up to four times the amount of money she has saved. “I have saved Sh. 800,000 in Sacco shares so far. This means that I can access a loan of up to Sh. 600,000 and guarantee it against my savings. This is a loan that doesn’t need approvals. It is instant,” she says. In addition, Michelle says that she earns dividends at a rate of 13 per cent per year. This amounts to Sh. 104,000 every year.
Granted, you may be attracted by the goodies that are attached to Saccos such as dividends and loans. But with so many Saccos around, it can be difficult for you to spot the Sacco that will grow your money. To guide you, we take a look at some of the best Saccos in Kenya by dividends and return on share capital.
This is one of the oldest Saccos in Kenya. It was founded in 1972 and has branches in Nairobi, Eldoret, Kakamega, Nyeri, Kisii, Nakuru, Meru and Mombasa. This Sacco has a membership of about 60,000. It pays dividends at a rate of 10.5 per cent on savings and 17 per cent on share capital. In addition, the Sacco has a fixed deposit account option where interest paid varies according to the amount of money saved. For example, if you save between Sh. 10,000 and Sh. 49,999 for one year, your savings will earn 7 per cent interest or between Sh. 700 and Sh. 3,499. If you save Sh. 200,000 to Sh. 1 million in this fixed account, you will earn interest at a rate of 8.5 per cent or between Sh. 17,000 and Sh. 85,000. Their highest fixed account interest is 12 per cent on Sh. 10 million and above. The Sacco allows members to borrow amounts equivalent to their savings if they don’t have guarantors, and amounts exceeding their savings with guarantors.
This Sacco society with headquarters in Nairobi has a membership of 140,000. The Sacco has branches in Nairobi, Mombasa, Kisumu, Nakuru, Ol Karia, Eldoret, Kawi, and Embu. In the dividend payments for the full year 2019, the Sacco paid dividends at a rate of 14 per cent on share capital and 10.5 per cent on savings. Its savings package is known as Alpha deposits. It targets individuals, groups, and corporates. This package allows members to save continuously on a monthly basis. However, savings under this account can only be accessed upon membership withdrawal.
This Sacco is headquartered in Ol Kalou Town, Nyandarua County. It has branches in Nairobi, Nakuru, Nyahururu, and Laikipia. The Sacco started as a Nyandarua County teachers’ cooperative society before opening up to the general public. It has been running an investment campaign where investors can invest and get a return of 20 per cent on share capital for a period of five years. This share sale has been selling at Sh. 100 per share, with 1 per cent bonus for every share purchase worth Sh. 150,000 and above. For the full 2020 financial year that was paid out in February 2021, the Sacco gave dividends at a rate of 13 per cent. The Sacco allows for share investors to take instant loans against their locked savings.
This Sacco has branches in Nairobi, Kisumu and Mombasa. Mhasibu pays interest on deposits at 8.15 per cent. It pays dividend on share capital at a rate of 15 per cent. The minimum share capital you can invest with is Sh. 10,000. With share deposit, you can contribute Sh. 1,600 per month. Mhasibu accepts securities against loans using deposits, guarantors, and unit trusts. However, if you apply for a loan at this Sacco and offer to secure it with your logbook, the Sacco will only give you 50 per cent of the total amount.
The Safaricom Sacco is based in Nairobi. It pays 7.5 per cent interest on deposits and 12 per cent on share capital. On top of this, the Sacco charges a 5 per cent withholding tax on interest earned. To qualify to earn dividends for the share capital, you will be required to have met the minimum deposit of Sh. 40,000. Dividends for members who have not met this minimum are ploughed back to their shares.
For the full year 2020 dividends that were paid out this month, Hazina members earned interest on deposits at a rate of 10.3 per cent. The Sacco paid dividends on share capital at a rate of 20 per cent. This Sacco will allow you to capitalize or plough back your dividends. If you plough back 100 per cent of your dividends, you earn 10 per cent of the amount as bonus. If you plough back 50 per cent of your dividends, you earn 5 per cent of the amount as bonus. If you capitalize a quarter of the dividends, you earn 2.5 per cent of the amount as bonus.
Top Saccos in Kenya: Experts’ takeaway tips
According to two financial video logs by Rina Hicks, a certified professional coach and investment banker, and Peter Gichinga, the board chair at Safaricom Investment Cooperative, this is what you should look out for when scouting for a Sacco:
Bylaws: Read the bylaws and understand how the Sacco you are interested in operates. Bylaws should answer questions such as how to exit, how to sell your shares, costs involved if you want to exit or swap shares. They should also tell you what will happen if you fail to pay the minimum monthly contribution. In most Saccos, the share capital is not withdraw-able but can be sold or transferred to an existing member upon your withdrawal from a Sacco.
The return on investment: Know what returns on average you should expect to get. If your money is locked for a year, how much interest will it earn? What value will you get if you invest in the Sacco’s share capital?
Membership diversity: If a Sacco was started by teachers or farmers, how far has it gone in creating diversity? The best Saccos have a diversity of membership. Don’t go for a Sacco that is exclusively run by one category of people.
Long term value: This includes your ability to get credit from a Sacco. Get in a Sacco where you know people who can guarantee you loans if need be. You should also look at whether a Sacco offers secured loans.
Management: Check out how the Sacco is operated. Look at the board members and how past decisions and policies have been executed. Also look at the Sacco’s liquidity ratio to see the amount of savings versus disbursed loans. See where and how deposited funds are invested. Find out if the Sacco offers full disclosures on accounts and loans or not.
Automation: Don’t go for a Sacco that will require you to travel all the way to its headquarters to sign withdrawals or make a share swap or apply for a loan. Go for a Sacco that has automated its operations and accepts automation items such as standing orders.
This feature was first published in the Saturday Magazine. The Saturday Magazine is a publication of the Nation Media Group. The Nation Media Group is the largest media house in East and Central Africa.