How SACCOs in Kenya are structured

Illustration of getting a structure

A Savings and Credit Co-Operative (SACCO) is an association of like-minded individuals, registered under the Ministry of Cooperative Development and Marketing in Kenya, and authorized to take deposits from and lend to its members. Saccos are governed by the SACCO bylaws which state the objectives, membership, share capital, organization structure, management, and lending regulations. The sector is regulated by the Sacco Societies Regulatory Authority (SASRA).


Most SACCOs are managed by a professional management team, which reports to a committee elected by members annually or according to the bylaws of the Sacco. Many Saccos in Kenya have restricted membership to industry or sector of work. For example, Stima Sacco is for power generation and distribution sector employees, while Magereza Sacco is formed by prison services employees.


Saccos are deposit-taking in nature and are an ideal way to channel your savings. The Sacco pools the savings and lends them out or invests in authorized instruments such as shares, treasury bills, and bonds, and in some cases property as authorized by the by-laws. Returns from Sacco savings for a member are usually high and sometimes better than what banks offer. Some Saccos in the country help their members construct or buy homes at lower rates than the average mortgage rates offered by commercial banks.


Saccos require a minimum monthly contribution from members. This instills a saving discipline. In Saccos, the money isn’t accessible to the member unless they choose to withdraw from the Sacco or take out a loan. This protects the savings and prevents impulsive spending of cash saved. Savings in a SACCO do not attract bank charges at all. Interest paid on these savings is often higher than bank rates.


Once one is a member of a Sacco, they are allowed to borrow within the limits of their savings. The standard is a member can borrow up to 3 times their savings, provided other members give him a guarantee. Saccos have various products, such as emergency loans which are processed within a day, and school fees loans and development loans. While banks may be able to extend a larger unsecured loan to clients, borrowing from a Sacco has several advantages: Saccos have lower interest rates and these rarely change currently capped at 12% per annum. Banks also constantly revise their lending rates as advised by the Central Bank Rate while Saccos rarely revise their rates.

As a member of a Sacco, you earn interest on your savings which are part of what you have borrowed lowering your borrowing costs further. While repaying a Sacco loan, a member is expected to still maintain the same level of monthly savings as they did before. This builds a saving discipline and helps one accumulate a substantial savings base.

Management structure

Saccos are managed through the delegates system that constitutes the General Meeting which is the supreme authority of the Sacco. The Sacco delegates are numerous and distributed regionally on a “pro-rata” shareholding basis. The delegates elect from among themselves about a dozen members of the Board of Directors who are the governing body and the policymakers of the Sacco. The Sacco Board of Directors elect amongst themselves the following executive offices.

  • Chairman
  • Vice Chairman
  • Honorary Secretary
  • Honorary Treasurer

There is a Chief Executive Officer who is deputized by the Deputy Chief Executive Officer. The SACCO is managed through departments headed by departmental Managers as follows;

  • Finance Department
  • Accounts Department
  • Credit Department
  • Marketing Department
  • I.C.T. Department.
  • Internal Audit Department
  • Research and Development Department

Why Join a Sacco

Saccos pay hefty dividends on savings compared to banks.

It presents a golden opportunity for individuals to raise capital to start or grow a business. If you are planning to start a business in the future, or you want to grow your business Saccos is probably the best avenue to save and invest your money. For the majority of working Kenyans who dream of starting a business, their sound financial foundation should rest on Saccos as the main source of funding.

Access to affordable loans an alternative to banks

Commercial banks charge high interest on loans and pay peanuts on savings. The negotiation fees, insurance, interest rate volatility, and other often hidden fees and the requirement of tangible collateral make bank loans an expensive inconvenient source of capital for a start-up.

Sacco loans are the best option and they are cheap considering you earn dividends on your savings that double as your collateral.

Saccos also create a saving and contributory discipline that reduces one’s exposure. For instance, you must save at least a third of the amount of money you borrow and continue saving as you service the loan. The fact that you have to contribute one-third of your debt reduces the tendency to bite more than you can chew.

Your Emergency funds are catered for

Saccos provide an avenue for fixing emergencies that would otherwise have taken you to shylocks. As long as are in good books, Saccos can process emergency loans in hours. This assurance is a great resource to any business where an opportunity can easily pass you because you did not have cash at hand. Another good reason why entrepreneurs and employed people should embrace Saccos is to help in building a retirement nest egg. In the event your business goes bust, you leave employment abruptly or you retire, you have access to liquid cash. Saving makes a difference to your future.

One thought on “How SACCOs in Kenya are structured”

Leave a Reply

Your email address will not be published. Required fields are marked *