How a SACCO works: your money, your co-operative
A SACCO is not a bank — it is owned by the people who save in it. Understand shares, deposits, dividends and your vote, and why it matters.
KISE SACCO Editorial TeamMember education
A Savings and Credit Co-operative Society — a SACCO — is a financial institution owned and controlled by its members. Members pool their savings, and those savings are lent back to members at fair rates. Any surplus belongs to the members, not to outside investors.
Owners, not customers
When you open a bank account you are a customer. When you join a SACCO you become a part-owner. That ownership shows up in three ways:
- You hold share capital — your stake in the society.
- You have a vote — at general meetings each member has one vote, however much they save.
- You share in the surplus — through dividends and interest, as approved by members.
Share capital vs deposits
New members are often unsure about the difference, but it matters:
| Share capital | Deposits (BOSA) | |
|---|---|---|
| What it is | Your ownership stake | Your savings with the SACCO |
| What it earns | Dividends | Interest on deposits |
| Borrowing power | A membership requirement | Usually sets how much you can borrow |
| Withdrawable? | Generally transferable, not withdrawable | Refunded when you leave, per the by-laws |
Where do dividends come from?
The SACCO earns income mainly from interest on loans to members. After paying expenses, setting aside required reserves and providing for loans that may not be repaid, what remains is the surplus. The board proposes how it should be shared, and members decide at the Annual General Meeting — typically as a dividend on share capital and interest on deposits.
How SACCOs are governed and regulated
In Kenya, co-operative societies are registered under the Co-operative Societies Act (Cap. 490). SACCOs that take deposits are also licensed and supervised by the SACCO Societies Regulatory Authority (SASRA), which sets rules on capital, liquidity and governance. Inside the SACCO, members elect a board to oversee management, and accounts are audited every year and presented to members.
Why this model works
- Fairer credit. Rates are set to serve members, not to maximise profit for outsiders.
- Mutual support. Guarantors — fellow members — make it possible to borrow more than your own savings.
- Returns stay in the community. Surplus goes back to the people who created it.
Your part: save consistently, repay on time and attend general meetings. A SACCO is only as strong as the commitment of its members.
Ready to put this into practice?
Join KISE SACCO or sign in to the member portal to get started.
