Savings and Credit Cooperatives (SACCOs) assist individuals in developing a savings habit and an investment mindset while providing access to loans based on their requirements. The collective savings within a SACCO are utilized to offer loans to its members. These loans can be for various purposes such as working capital, weddings, children’s education, home improvements, health emergencies, or any personal urgent needs.
If you were to walk around and randomly tap someone on the shoulder, it’s likely that they are a member of a SACCO and may know others who are also part of one. As financial organizations owned and operated by their members who share a common interest, such as employment or community ties, those who contribute savings can use pooled funds to extend affordable credit to each other, truly showcasing the power of financial inclusion.
SACCOs are increasingly becoming essential in promoting financial inclusion across various regions, particularly in developing nations. They have gained popularity in numerous African countries, including Kenya, Uganda, Tanzania, Ghana, and Rwanda, among others. According to the latest World Council of Credit Unions (WOCCU) statistics, Africa has more than 41 million SACCO members.
As per the World Bank, financial inclusion is characterized by the ability of individuals and businesses to access valuable and affordable financial products and services that fulfill their requirements, including transactions, payments, savings, credit, and insurance, offered responsibly and sustainably. Gaining access to a transaction account serves as the initial step toward broader financial inclusion, enabling individuals to save, send, and receive money.
Through technological advancements, SACCOs can provide tailored products and broaden their outreach to new members. Technology has empowered SACCOs to offer services that are accessible to everyone, including those tailored for specific groups such as chamas and farmers.
Mobile banking has a more extensive presence within society and is thus more easily accessible. This development has allowed SACCOs to extend their services to remote areas and assist members in hard-to-reach locations. Mobile banking has enabled SACCOs to introduce more loan options and other services, benefiting their members.
As mentioned previously, specific offerings contribute to financial inclusion by making formal financial services accessible, affordable, and available to all demographic segments. This ensures that economic growth remains inclusive and sustainable.
Technology has also facilitated the integration of SACCO services with entities in the fintech arena, including banks.
SACCOs have collaborated with local banks to allow members to transfer their funds into their bank accounts conveniently. This has made it easier for members to execute transactions from their homes, enhancing operational efficiency.
Data analytics have empowered SACCOs to better understand their clients, enabling them to provide suitable products and services.
Utilizing various data analysis tools within a SACCO framework helps gain deeper insights into member preferences. This approach allows for the creation of targeted solutions, products, and services tailored to individuals, groups, or specific demographics. Data analytics provide SACCOs with the means to delve deeper into the needs expressed by members who belong to traditionally underserved communities.
