Small Savings and Credit Cooperative Organizations (SACCOs) are turning to innovative solutions to ensure that they provide their members with sufficient liquidity for loans and credit facilities. They are adopting new approaches that allow them to remain competitive, sustainable, and capable of meeting the growing loan demand.
The Saccos, which have long played an essential role in providing financial services to lower-income individuals, small business owners, and rural communities, are now looking beyond traditional funding methods to ensure that they can continue offering affordable financial assistance to their members.
One of the primary strategies small Saccos employs is diversifying revenue sources. Many small are now exploring external funding options, such as partnerships with larger Saccos, microfinance institutions (MFIs), and commercial banks. These institutions offer credit lines to smaller Saccos, allowing them to access working capital and continue disbursing loans to their members. Some have started issuing bonds to the public, allowing them to raise funds from individual investors in exchange for promising returns.
According to the Sacco Societies Regulatory Authority (SASRA), several Saccos in 2024 embraced bond issuance as a viable strategy, with a combined total of KSh 5 billion raised through bond offerings nationwide. These funds are then channelled into providing more loans to Sacco members.
Saccos also turn to digital and mobile banking platforms to better manage their liquidity. The adoption of mobile money services has been a game-changer for Saccos in reaching members who may otherwise be unable to access services at brick-and-mortar branches.
Mobile platforms have enabled Saccos to offer digital loans and credit facilities with faster processing times, reducing operational costs while ensuring that liquidity remains available to members when needed. Through mobile loan applications, Sacco members can apply for and receive loans directly into their mobile wallets, bypassing the need for physical visits to Sacco offices.
Strategic collaborations with fintech companies are also enhancing Sacco’s liquidity management. They also use digital platforms to offer innovative loan products, such as micro-loans and instant credit facility members. This partnership is helping Saccos expand their reach and offer more flexible loan products, addressing the needs of a diverse membership base.
Another growth strategy for these Saccos is adopting advanced credit scoring models and automated systems that allow them to assess loan applications more accurately. These systems reduce the risk of loan defaults and ensure that Saccos can lend more confidently, knowing their available liquidity is being allocated responsibly.
Saccos are also becoming a one-stop shop and introducing insurance products to protect the institution and the borrower from risks associated with lending.
As a result of these innovations, many small Sacco are reporting improved liquidity levels, enabling them to meet the growing demand for loans in a competitive financial market. In 2024, data from SASRA revealed that loan disbursement among small Saccos had increased by 18% compared to the previous year, with many members benefiting from more accessible and faster loan products.
These advancements also contribute to the overall growth of the cooperative sector, with small Saccos becoming more resilient to economic shocks.
Small Saccos are expected to continue embracing technological advancements and exploring new funding mechanisms to strengthen their liquidity and enhance their service delivery.
