IMPORTANCE OF SAVINGS AND CREDIT CO-OPERATIVES IN KENYA

Although Kenya experienced a slowdown in growth in the first quarter of 2017 (now at 4.7%, down from 5.9% in the first quarter of 2016), the country is not short of lending opportunities. Savings and Credit Co-operatives (SACCOs), much like a credit union, are now one of the leading sources of credit for socioeconomic development. They differ from a credit union, however, in that they are organized around a certain community or organization.

SACCOs were introduced in Africa by Father John McNulty – a Roman Catholic priest – in 1955. Naturally, Kenya – a country eager to enhance their agricultural performance and continue the development of specific cash crops – decided the recommendation of SACCOs was necessary.

SACCOs TODAY

At present, SACCOs are an integral part of the Kenyan government’s economic strategy, implemented to enhance income-generating opportunities. Particularly in rural areas has the co-operative movement been recognized by the government as a vital institution for the mobilization of material resources for development in these particular areas, where the majority of citizens earn their living primarily from agriculture.

Although the movement in Kenya was agriculturally oriented at the time, a recent diversification of SACCOs has taken place – notably in saving and credits. Now, the co-operative movement contributes to well over 45% of Kenya’s GDP, with at least one out of two Kenyans directly or indirectly deriving their livelihood from a SACCO. The movement has now diversified by providing loans for sectors such as housing, land, education and agriculture, steeply replacing the roles of banks or even micro-finance institutions

The reasoning behind the movement’s success is that SACCOs often fill a vacuum in the rural areas by offering better interest rates than rival banks. The co-operatives lend generously, in part because their representatives are often from the same workplace or live a few doors away. This makes it easier for them to justify risks, stimulate repayment and serve citizens that a bank would not think twice about.

Saccos are therefore the best place to invest your money at. At Dumisha Sacco, we offer complimentary services to our clients with Loan products at the lowest interest rates of 12% P.A.

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