Why SACCOs Are Popular In Product Offering

SERVICE DELIVERY

Why Saccos Are Popular in Product Offering

By Staff Writer

Compared to commercial banks, SACCOs appear to offer members enhanced interest rates, a key aspect that makes their offering more attractive, popular and reliable, especially during hard economic times.

Admittedly, SACCOs remain more popular among potential borrowers in Kenya’s middle and low-income brackets, including millions of business people in the ubiquitous Informal sector, popularly referred to Jua Kali. From the onset, it is important to understand that commercial banks are, and will remain forprofit institutions owned by various owners of capital, while SACCOs are cooperatives wholly owned and financed by members and governed by a team elected by the savers. The beauty of SACCO structures is that they require a member to save continually and this in turn enables one to develop the culture of saving regularly. SACCOs pay out bonuses on savings to members; on the other hand, banks, pay dividends to shareholders depending on their dividend policy. In contrast to other investments, savings in SACCOs have guaranteed returns. Kenyans are flocking to SACCOs in droves because these financial institutions offer members loans at affordable, stable and friendly rates. More so, SACCOs have a diversity of loans – for instance, emergency loans, education loans, MSME/business loans, and housing loans among others. Moreover, the process of acquiring loans is friendly, simplified, and more importantly, digitised in most SACCOs through web-banking. It should be understood that SACCOs are member-owned financial-based Cooperatives whose principal purpose is to mobilize savings to enable members to qualify and access loans on competitive terms and

conditions as a way of improving members’ socio-economic wellbeing. During the current challenging times marked by drought, high cost of living, ever-increasing fuel prices, job cuts and the general economic constraints, SACCOs come in handy – increasingly becoming popular with Kenyans. They comfortably provide alternatives to commercial banks for low-income earners in need of finances for projects, programmes, businesses and also for meeting domestic financial obligations. Today, the majority of commercial banks are pledging to lend cheaply to borrowers, but Kenyans are firmly turning to SACCOs whose terms and conditions for transactions are more-friendly, appealing and with lesser red tape bureaucracies. SACCOs are more accommodating and adaptable in their debt collection than commercial banks, hence making them preferred option during harsh economic times.

Structurally and in their operational set up, SACCOs are cooperatives whereby each bona fide member has a voice and a share in the profits, whereas commercial banks are corporations where decisions are made solely by directors who are a small group of investors. Thus, by cooperating in SACCOs, a member has a say on how, when and where your money should be invested.

SACCOs offer members a higher rate of interest on member’s loan than banks. SACCOs are more flexible and congenial in terms and conditions of repayment of loans, and by extension, they are responsive to members’ personal and business needs in emergencies and other unexpected happenings. Overall, SACCOs give members the opportunity to interact and ventilate on what is working for them and what is not, more so members share knowledge on how best to manage loans and funds generally g