Why SACCOs are the best modes of saving than banks in Kenya

Saving through Savings and Credit Co-operative Societies (SACCOS) in Kenya can be a highly advantageous option compared to traditional banks. Saccos prioritize the needs of their members, offering affordable credit and higher returns on savings. They operate on a not-for-profit basis, meaning any surplus generated is distributed back to the members in the form of dividends or increased interest rates.

This member-centric approach fosters financial inclusion, particularly for individuals who may have limited access to formal banking institutions, and enables them to access financial services tailored to their specific needs. Saccos also promote a sense of community and social support, providing networking opportunities and programs to enhance financial literacy and entrepreneurship skills. By choosing a Sacco, individuals can experience the benefits of democratic decision-making, member ownership, and a focus on their financial well-being.

Deciding whether to save through a Sacco or a bank depends on various factors and your individual preferences.

Here is why Savings and Credit Co-operative Societies (SACCOS) are often considered advantageous modes of saving compared to traditional banks:

Why SACCOS are the best modes of saving than banks in Kenya

1. Member Ownership and Control

SACCOS are owned and controlled by their members, who are also the customers. This means that members have a direct say in the decision-making process and can actively participate in shaping the policies and operations of the SACCOS. Members elect their leaders, serve on committees, and have a voice in the direction of the organization. In contrast, banks are typically owned by shareholders who may not have the same level of direct involvement or control.

2. Access to Affordable Credit

One of the main advantages of SACCOS in Kenya is their emphasis on providing affordable credit to their members. SACCOS offer loans at competitive interest rates and often have more lenient lending criteria compared to banks. This can be particularly beneficial for individuals who may not meet the strict requirements of traditional banks, allowing them to access financing for various purposes, such as education, housing, or business development.

3. Higher Returns on Savings

SACCOS typically offer higher returns on savings compared to traditional banks. This is because SACCOS operate on a not-for-profit basis, and any surplus they generate is distributed back to the members in the form of dividends or higher interest rates on savings. In contrast, banks aim to maximize profits, which may result in lower interest rates on savings accounts.

4. Financial Inclusion

SACCOS play a crucial role in promoting financial inclusion in Kenya. They cater to individuals from various income levels, including those in rural and underserved areas. SACCOS provide accessible and affordable financial services to members who may have limited access to formal banking institutions. By offering savings, credit, and other financial products, SACCOS contribute to the economic empowerment of individuals and communities.

5. Social Support and Networking

SACCOS foster a sense of community and solidarity among members. They often provide social support networks and opportunities for members to connect and collaborate. Members can access training, workshops, and mentorship programs offered by SACCOS, which can enhance financial literacy, entrepreneurship skills, and overall personal development.

It’s important to note that while SACCOS have their advantages, banks also play a significant role in the financial system in Kenya. Banks offer a wide range of services, such as international banking, advanced investment products, and sophisticated financial technology. The choice between a SACCOS and a bank ultimately depends on individual preferences, financial goals, and the specific services and benefits offered by each institution.

What to look for when choosing a SACCO

When choosing a Sacco in Kenya, there are several important factors to consider. Here are some key aspects to look for when selecting a Sacco:

1. Financial Stability: Assess the Sacco’s financial stability and performance. Review its financial statements, capital adequacy, asset quality, and profitability indicators. Look for a Sacco that has a strong track record of stability and consistent growth over time.

2. Regulatory Compliance: Ensure that the Sacco is registered and regulated by the relevant regulatory authorities in Kenya, such as the Sacco Societies Regulatory Authority (SASRA). This ensures that the Sacco operates within the legal framework and adheres to the necessary standards and guidelines.

3. Membership Eligibility: Understand the membership requirements of the Sacco. Check if you meet the eligibility criteria, such as being part of a specific profession, organization, or community. Consider whether the Sacco aligns with your interests and goals.

4. Range of Products and Services: Evaluate the range of financial products and services offered by the Sacco. Look for a Sacco that provides a comprehensive suite of services, including savings accounts, affordable credit facilities, investment options, insurance products, and other relevant financial services.

5. Interest Rates and Fees: Compare the interest rates on savings accounts, loan facilities, and any other applicable fees or charges. Look for a Sacco that offers competitive interest rates on savings and affordable loan rates, while keeping the fees at a reasonable level.

6. Customer Service and Member Support: Consider the quality of customer service provided by the Sacco. Look for a Sacco that values its members and provides efficient and responsive customer support. Assess their commitment to financial education, member development programs, and other forms of support that can enhance your financial well-being.

7. Reputation and Reviews: Research the Sacco’s reputation within the community or sector it serves. Seek feedback from existing members and consider online reviews or testimonials. A positive reputation and satisfied members can indicate a well-managed and member-focused Sacco.

8. Governance and Transparency: Evaluate the governance structure of the Sacco. Look for transparency in decision-making processes, accountability, and adherence to ethical standards. Consider whether the Sacco has sound governance policies and practices in place.

By considering these factors, you can make a more informed decision when choosing a Sacco that aligns with your financial goals, provides reliable services, and prioritizes the interests of its members.

Some of the best performing SACCOS that I recommend in Kenya

While I can provide general information about Saccos in Kenya, it’s important to note that determining the “best performing” Saccos can be subjective and may vary over time. However, here are a few well-known Saccos in Kenya that have been recognized for their performance and positive reputation:

1. Harambee Sacco Society Limited: Established in 1970, Harambee Sacco is one of the largest and most reputable Saccos in Kenya. It has a wide membership base and offers a range of financial services, including savings, loans, and insurance products. Harambee Sacco has consistently demonstrated strong financial performance, competitive interest rates, and effective member services.

2. Stima Sacco Society Limited: Stima Sacco primarily serves employees in the energy sector, including Kenya Power, Kenya Electricity Generating Company (KenGen), and various energy-related organizations. It has a long-standing history and is recognized for its stability, high returns on savings, and efficient loan products. Stima Sacco also provides investment opportunities and financial education to its members.

3. Mwalimu National Sacco: Mwalimu National Sacco is primarily focused on serving teachers and employees in the education sector. It has gained popularity due to its strong financial performance, attractive interest rates, and diverse range of financial products. Mwalimu National Sacco emphasizes financial literacy and offers member development programs.

4. Kenya Police Sacco: Kenya Police Sacco is tailored to the needs of police officers and members of the disciplined forces. It has established itself as one of the leading Saccos in Kenya, known for its robust financial position, competitive loan products, and attractive dividends for its members. The Sacco provides a wide range of financial services and has a large membership base.

It’s important to conduct thorough research and due diligence before selecting a Sacco. Consider factors such as financial stability, historical performance, membership requirements, range of services, customer reviews, and reputation within the specific community or sector. Additionally, consult with fellow members and seek professional advice to make an informed decision based on your individual needs and preferences.

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