How SACCO Rebates and Dividends Are Calculated

As Savings and Credit Cooperative Organizations (SACCOs) prepare to declare annual returns, many members seek clarity on how rebates on deposits and dividends on share capital are calculated. Understanding these two income streams is essential for members who want to maximize the benefits of saving through a SACCO.

1. Rebates on Deposits

Rebates are calculated on a pro-rata basis, meaning the amount earned depends on how long each deposit remains with the SACCO during the financial year. Deposits made earlier in the year earn more because they remain invested for a longer period.

For example, assume a rebate rate of 13% per annum and consistent monthly deposits of Ksh 5,000 from January to December. In this specific calculation model, a January deposit earns rebates for 11 months, while a June deposit earns for six months. A December deposit earns no rebate for that financial year as it has been held for zero full months.

Monthly Breakdown (13% Interest Rate):

1. January: 13% × 5,000 × 11/12 = Ksh 596
2. February: 13% × 5,000 × 10/12 = Ksh 541
3. March: 13% × 5,000 × 9/12 = Ksh 487.50
4. April: 13% × 5,000 × 8/12 = Ksh 433
5. May: 13% × 5,000 × 7/12 = Ksh 379
6. June: 13% × 5,000 × 6/12 = Ksh 325
7. July: 13% × 5,000 × 5/12 = Ksh 271
8. August: 13% × 5,000 × 4/12 = Ksh 217
9. September: 13% × 5,000 × 3/12 = Ksh 162.50
10. October: 13% × 5,000 × 2/12 = Ksh 108
11. November: 13% × 5,000 × 1/12 = Ksh 54
12. December: 13% × 5,000 × 0/12 = Ksh 0

• Total Gross Rebate: Ksh 3,574
• Withholding Tax (5%): Ksh 178
• Net Rebate Payable: Ksh 3,396

2. Dividends on Share Capital

Dividends are calculated differently. They are paid on share capital and are not prorated. Instead, dividends are based on the member’s total share capital balance at the end of the financial year, regardless of when those shares were purchased.

For example, if a member holds Ksh 10,000 in share capital and the SACCO declares a 20% dividend:

• Gross Dividend: 10,000 × 20% = Ksh 2,000
• Net Dividend (After 5% WHT): 2,000 − 5% = Ksh 1,900

Summary of Returns

When the rebates and dividends are combined, the member’s total earnings are as follows:

• Total Gross Returns: Ksh 5,574

• Total Net Returns: Ksh 5,296

This breakdown highlights the importance of saving early and consistently. By steadily building share capital and making early deposits, members can enjoy the maximum possible returns from their SACCO membership.