The best financial move you can make when you are still young and energetic is investing. Investment is simply not restricted to conventional forms of buying a house, a plot of land, or real estate. Putting aside your money in a SACCO is equally a form of investment. The reason why most young people shun the idea of a SACCO is probably that they are not familiar with the concept.
What is a SACCO?
Basically, a SACCO is an acronym for Savings and Credit Cooperative Society. Like most financial groupings such as Chama’s, a SACCO is formed and operated by members with a similar financial vision. The primary objective for savings society is to provide a savings and credit facility to its members. This then explains the reason why most professionals have SACCOs. Examples of these in Kenya include Stima SACCO, Mwalimu SACCO, Unaitas SACCO, etc.
4 Key Factors to Consider before Joining a SACCO
The popularity of SACCOs in Kenya cannot be understated. As such, the current number of SACCOs is well above 20. Before joining one, you should consider:
- Fees and Rates: Inquire about how much interest your deposit will earn and the fees charged for each loan. Unlike banking institutions, with a SACCO you have to purchase shares from which you will receive the dividends. Therefore, put into consideration the rate of interest for your shares.
- Technology: Check with your SACCO to find if they have the right technology that will enable you to perform transfers, automate savings, budgeting tools, etc.
- Proximity: When you are thinking about convenience consider the physical location of the SACCO. Besides, a physical location also ascertains reliability. When problems arise or you have unanswered questions, you should be able to easily access the cooperative’s office.
- Certification and validity: An authentic SACCO will have proof of registration from the Sacco Societies Regulatory Authority (SASRA). You can also check out for proof of legitimacy through other operating certificates such as business operating licenses.
Why You Should Invest in a SACCO
As mentioned earlier, a SACCO is basically composed of persons with similar interests. For some cooperatives, the end goal is to make investments in various industries. Others still prioritize providing housing to their members. An example of one such SACCO is the BodaBoda SACCO based in Kitengela. As the name indicates, it is run by motorbike owners who successfully managed to save and build housing for all their members.
The culture of SACCOs is such that saving is not optional rather it is mandatory and should be regular. This means that members are required to make monthly contributions without fail. While it might seem like a tough measure, it will help you develop a savings culture.
The initial concept behind SACCOs was to avail credit to MSMEs or persons with fewer or less stringent requirements. This means that it is easier to access loans with a savings society than with a commercial bank. Besides, with most commercial banks charging interest rates of as high as 20%, SACCOs have lower annual rates of up to 10%.
For one to become a member of a SACCO, one is required to purchase a minimum share of stocks. Thus, you are considered a co-owner and you are entitled to receiving annual dividends. With some savings societies, dividend rates can be as high as 10% to 15%. This is a considerably good deal if you can increase your savings and shares with the SACCO.
The liability of SACCO members is limited to the amount of capital that a person has contributed. In the event that the savings society goes bankrupt or accused of fraudulent activities, members’ investment is still safe.