A cooperative society is a registered regulated group of individuals who have a common economic need. Its purpose is to improve the economic status of its members.
A SACCO (Savings and Credit Cooperative Organization) is a special cooperative owned, managed and run by its members who have a common interest and goal with a major focus on mobilization of funds and provision of affordable credit to its members who are both the owners and users.
Saccos in Kenya are categorized into ﬁnancial and non-ﬁnancial cooperatives. Non-ﬁnancial cooperatives deal with the marketing of members’ products and services such as milk, coffee, tea, and handicrafts. Financial cooperatives comprise Saccos, housing, and investment cooperatives.
The Sacco sub-sector is two-tiered given the range of ﬁnancial services to members and regulatory regime. The traditional Saccos, described in law as Non-Deposit taking Saccos provide a limited range of savings and credit products, are registered and supervised under the Cooperative Services Act, CAP 490.
The Deposit Taking Saccos (DTS), besides the basic savings and credit products, also provide basic ‘banking’ services (demand deposits, payments) and Front Office Services Activities (FOSA) and are licensed and supervised under the Sacco Societies Act of, 2008.
As of 2018, there are 175 SACCOS in Kenya licensed and gazetted by the government to undertake deposit taking. They account for 78% of the total assets and deposits of the entire Sacco sub-sector. Further, they command 82% of membership in the Sacco industry.
The general trend is that Saccos start as non-deposit taking Sacco business and grow to deposit-taking Sacco business to expand the range of ﬁnancial services to members.
To understand how to register a Sacco in Kenya, continue reading below.
A SACCO is required to provide a minimum core capital of Ksh 10 million as shown in your bank account statements. You must also provide a detailed three-year business plan and feasibility study including projected financial statements. After providing all these, your SACCO directors and senior management will be subjected to a fit and proper test in order to vet their moral and professional suitability to be on the board and to manage the SACCO society.
Sacco Registration Process
Choose and submit the Sacco name to the Cooperative Society Department in Sheria House, Nairobi. They will review the name and upon approval, the board members and members will have to fill the registration application forms. Individuals eligible to undertake Sacco registration must
a. Be at least fifteen (15) years of age
b. Board members should be eighteen (18) years of age
c. Every member must have a common need with other members of the Sacco
d. A member must be in an occupation relevant to the primary Sacco
e. A member must be capable of paying fees and buying shares
A Savings and Credit Cooperative Society (SACCO) should have at least twenty (20) members requirement.
The registration fee for a basic Sacco is Ksh.500.
2. Once the registration of your basic Sacco is complete and you would like to convert it to a DTS, you will submit a license application form to SASRA (Sacco Societies Regulatory Authority) alongside your SACCO registration documents for review.
In addition, below are the documents you must submit;
a. Completed application for a license
b. A certified copy of the Sacco Society’s registration certificate
c. A verified official notification of the Sacco Society ‘s registered head office.
d. A certified copy of the Sacco Society ‘s bylaws
e. A three-year business plan and feasibility study of the Sacco Society to be licensed detailing the vision and mission, scope and nature of business operations, projected profitability to achieve the minimum prudential standards, control measures and monitoring procedures
f. A certified extract of minutes of the general meeting resolution authorizing the application for the deposit-taking license.
g. The name of the proposed chief executive officer
h. Certified copies of financial statements for the preceding three years, where applicable.
i. Evidence that the Sacco Society has adequate capital
j. An application fee of three thousand Kenya shillings.
3. If satisfied, SASRA will issue a Letter of Intent, upon which the SACCO will be required to set up its business premises, put in place a management information system (MIS), and develop a comprehensive risk management framework.
4. Once all the above have been completed, SASRA will then conduct an on-site inspection within 30 days.
5. If satisfied, SASRA will issue a Letter of Compliance to the SACCO within another 30 days.
6. SASRA will then issue a license upon payment of the SACCO licensing fee of Ksh 50,000 for a head office and Ksh 20,000 for every branch held.
It takes an average of 4 months for SASRA to issue a license that will enable you to acquire Sacco Bank account, other business permits, NHIF and NSSF, tax arrangements. The license to conduct deposit-taking business will be renewed after every one year (valid up to the 3 1st December, of the year in which it is issued)
The SACCO, for continued operation, shall at all times maintain :
a. Core capital of not less than ten million shillings;
b. Core capital of not less than ten percent of total assets;
c. The institutional capital of not less than eight percent of total assets; and
d. core capital of not less than eight percent of total
The underlying principle of a SACCO is to save and provide credit facility to its members. Some of the advantages of becoming a member of a SACCO include;
Saccos help you to save. As a member, you are required to contribute a certain amount of money towards your savings which until the day that you’ll come up with an idea to invest in. It could be a business, buying land, a house etc.
It’s much easier to secure a loan from a Sacco as opposed to other financial institutions. As a member, you are entitled to get a loan facility that is a predicated on your deposit. It could be three or four times depending on that Sacco’s policies. In addition, the interest charged on the loans is generally much cheaper compared to other lenders.
As a Sacco member, you are a co-owner of the Sacco and therefore entitled to annual dividends. The dividend rate may be as high as 10-15%!
Saccos are regulated and are a safe economic investment, bring your friends or colleagues together and create one or join one in your neighborhood.