SACCOs Miss Out on Remittance Market, Survey Reveals
A recent survey of SASRA, Financial Sector Deepening Kenya (FSD Kenya) and The International Fund for Agricultural Development (IFAD) titled the role of SACCOs as international remittance providers in Kenya has revealed a significant gap in the use of SACCOs for remittances among diaspora members. Despite many members regularly sending money home for purposes such as family support, personal investments, and utility payments, a staggering 78 percent of the sampled SACCOs do not offer remittance solutions.
Out of 140 SACCOs surveyed, only 30 (22 percent) reported providing remittance services, primarily through partnerships with banks. The majority of SACCO members expressed that remitting funds via SACCOs is “very rare,” often turning to traditional financial services providers like banks, money transfer operators, and mobile money services instead.
The findings indicate that while there is interest in remittance services for convenience and emergency transfers, SACCOs are still predominantly seen as long-term savings mechanisms rather than viable options for frequent transactions. Most diaspora remitters prefer using other methods for sending money intended for family support, personal investments, utility payments, and school fees.
However, there are moves to change this narrative. The SACCO Societies Regulatory Authority (SASRA) is advocating for the integration of SACCOs into the National Payments System to enhance their role in remittance transactions. Additionally, the Retirement Benefits Authority (RBA) is looking to leverage SACCOs in its strategies targeting the informal sector. The Capital Markets Authority (CMA) is also encouraging SACCOs to invest more in capital markets, while the Insurance Regulatory Authority (IRA) explores the development of tailored insurance products for SACCO members.
The Ministry of Foreign and Diaspora Affairs, through its State Department for Diaspora Affairs, believes that SACCOs can provide more effective remittance solutions due to their strong connections within local communities. As these initiatives unfold, there is potential for SACCOs to become more recognized as key players in the remittance landscape.
