THE RISE OF SACCOS IN MONTHLY FINANCIAL MANAGEMENT
A recent report from the 2024 FinAccess Survey reveals changing financial preferences among Kenyans. According to the Survey, Savings and Credit Cooperatives (SACCOs) are Kenya’s most utilized financial channels, with a monthly usage rate of 74.9%. This surpasses banks, which have a usage rate of 58.7%. The popularity of SACCOs is attributed to their roles in loan repayments, savings contributions, and salary deposits.
Additionally, the Survey found that approximately 11.7% of adult Kenyans prefer using SACCOs, while mobile money remains the most preferred option at 82.3%. Bank usage has also increased, now sitting at 52.5%.
There was a significant surge in daily financial service usage in Kenya in 2024, driven by mobile money, which more than doubled to 52.6% from 23.6% in 2021, highlighting its convenience and accessibility. Daily mobile banking usage increased to 8.4%, while daily bank transactions rose to 4.8 %.
Traditionally, SACCO members primarily accessed services at SACCO headquarters, a practice now standing at just 1.1 % as the sector has embraced the technological revolution.
SACCOs have adopted modern service delivery channels such as agency banking, internet platforms, and mobile technologies, significantly transforming member interactions.
Despite the shift towards technology, SACCO members continue to express strong confidence in branch-based services, particularly in rural areas, where usage remains high at 66.7 %, compared to 52.0 % in urban settings.
These insights highlight the evolving landscape of SACCO service delivery, emphasizing the importance of addressing barriers to technology adoption, particularly in rural areas and among female users.
Tailored training and simplified user interfaces could enhance inclusivity and accelerate the shift toward digital channels.
The majority of respondents who ceased using SACCOs identified voluntary withdrawal (51.7 %) and an inability to maintain their accounts (46.2 %) as the primary reasons for discontinuation. Interestingly, urban respondents were more likely to cite voluntary withdrawal compared to their rural counterparts, at 51.1 % versus 47.4 %, respectively.
Monthly usage patterns indicate that while mobile money dominates daily transactions, banks and SACCOs play a vital role in managing monthly financial obligations.
According to the Survey, the attraction of SACCOs is attributed to their expanded reach following the registration of Non-Withdrawable Deposit-Taking Saccos.
Lower interest rates on loans levied by SACCOs compared to commercial banks may also have motivated their higher usage. SACCOs are also more popular in urban areas, aided by advanced mobile channels.
Social status influences the use of various financial providers and products. Wealthy Kenyans primarily use mobile money, banks, Hustler funds, insurance, SACCO, pensions, and investments.
This Survey shows that financial services usage continues to grow in rural and urban areas, driven by mobile money, which has narrowed the rural-urban divide.
Mobile money remains dominant, used by 77.0% of rural and 89.7% of urban residents. While informal financial services have declined overall, rural informal group usage rose to 32.3% in 2024, contrasting with a drop to 28.5% in urban areas.
Informal group usage remains relatively stable across wealth quintiles, with slight decreases as wealth increases.
Hustler fund is particularly significant among middle and higher-income groups, reflecting its appeal as an accessible credit option.
Affordability is the leading barrier to financial product usage, especially for savings, banks, and insurance.
Awareness gaps hinder the uptake of securities and pensions, while relevance affects mobile banking and credit.
Trust concerns are significant for SACCOs, while eligibility challenges impact mobile money and banks. Mobile phone ownership is also a major barrier to mobile money usage.
Overall SACCO usage improved from 9.6 % to 11.7 %, as more individual households joined Saccos, which offered loans at a relatively lower rate during the high interest rate period.
Mobile channels (e.g., USSD, apps, pay bills, POS, and ATMs) emerged as the most preferred usage mode at 70.6 %, surpassing traditional SACCO usage at 66.1 %.
Notably, rural users showed a higher preference for traditional channels at 75.1% compared to 60.7 % in urban areas, reflecting differing access and technology adoption levels.
Additionally, older users (above 55 years) demonstrated a strong inclination toward traditional channels, with 80.2% opting for traditional usage versus 41.8% for mobile channels, highlighting a significant generational gap in technology adoption.
Respondents cited various incidences of money loss. Internal fraud in SACCOs and pension schemes was the most prevalent, at 75.1 % and 66.1 %, respectively, while accidental money sending was prevalent in mobile money services at 70.0 %.
Survey findings also found that those interviewed cited reported various challenges in the use of financial services and products. For mobile money users, 21.1% reported system failures as a key issue, followed by Money lost at 9.8%. SACCO users cited system failures at 9.8%.
