All you need to know about Sacco Shares and Deposits. What is the difference?
For many Kenyans, joining a Savings and Credit Cooperative (Sacco) is a critical step toward financial freedom. Yet, for those attempting to leave, the process often turns into a source of frustration. According to the latest Annual Sacco Supervision Report by the Sacco Societies Regulatory Authority (SASRA), complaints from members have hit a worrying high, rising from 715 in 2023 to 764 in 2024.
The regulator reveals that a staggering 64.27% of all complaints lodged in 2024 centered on one specific issue: the refund of savings and the transfer of shares.
SASRA attributes this rising trend not necessarily to Sacco insolvency, but to a fundamental “confusion and lack of awareness” among members. Most disputes arise when individuals withdraw from membership expecting an immediate cash payout, only to discover a harsh reality: in the world of cooperatives, Savings and Share Capital are two very different financial instruments.
The Misunderstanding: Deposits vs. Shares
To navigate a Sacco exit smoothly, members must understand the distinct difference between the money they save and the money they invest as owners.
- Savings (The Refundable Nest Egg)
Commonly known as BOSA (Back Office Services Activity) deposits or non-withdrawable deposits, these are the funds members contribute monthly. They serve as collateral for loans and are the primary engine of a Sacco’s lending power.
- Are they refundable? Yes.
- The Process: Upon deciding to exit, a member must submit a formal written notice. However, this is not an instant withdrawal. Saccos typically enforce a waiting period—often up to 60 days.
- The Catch: Before a refund is processed, the Sacco must ensure the exiting member has cleared all outstanding loans. Furthermore, if the member has guaranteed loans for others, they must find replacement guarantors before their deposits are released.
- Share Capital (The Ownership Stake)
This is where the majority of confusion—and complaints—stems. Share capital represents a member’s equity and ownership in the Society. It is what makes you a co-owner, not just a customer.
- Are they refundable? No. Share capital cannot be withdrawn as cash from the Sacco, even upon exit.
- The Solution: While non-refundable, shares are transferable. To recover this value, an exiting member must sell or transfer their shares to an existing member or a new recruit.
- The Process: The transferor (exiting member) and transferee (buyer) must sign a Share Capital Transfer Agreement Form in the presence of witnesses. The Board must then approve this transaction to ensure it meets legal by-laws.
Why the backlog?
The rise in complaints, according to SASRA, is largely due to exiting members assuming their Share Capital will be refunded alongside their deposits. When they are told they must find a buyer for their shares—a market that may not be immediately available—frustration mounts.
While some Saccos have internal “share transfer funds” to facilitate these buyouts, many do not, leaving former members in limbo. However, it is worth noting that until shares are transferred, they continue to earn dividends for the holder.
Know Your Sacco
With the regulatory landscape tightening, SASRA is keen on ensuring members understand what they are signing up for.
- What is a Sacco? It is a cooperative where members are both owners and users, focused on mobilizing funds to provide affordable credit.
- Non-Deposit Taking (NDT) Saccos: These entities mobilize savings strictly for use as loan collateral. Unlike banks or Front Office Service Activities (FOSA), members cannot walk in and withdraw cash over the counter; funds are only accessible via loans or upon exiting the society.
Under new regulations, NDT Saccos with deposits exceeding Ksh 100 million, those operating virtually (Digital Saccos), or those mobilizing funds from the diaspora (Diaspora Saccos) will now face stricter supervision.
For Sacco members, read the by-laws.
Understanding that your monthly contribution is a mix of refundable savings and permanent equity is key to avoiding shock upon exit. While savings can be retrieved after a notice period and loan clearance, your share capital is an asset you must sell, not a deposit you can withdraw.
As the sector grows, closing the knowledge gap between Saccos and their members will be the only way to bring those complaint numbers down in 2026.
