SASRA REPORT: Saccos offer high financial returns than banks

Forget the negative news you hear about Saccos, Sacco members earned Ksh30.6bn as dividends and rebates in 2020 financial year. Saccos beat banks in offering high returns. Take it to the banks!

Saccos remain the best financial institutions offering high returns on members’ savings and deposits.

The latest data shows the Deposit-Taking Saccos (DT-Saccos) paid a total of Kshs 30.61 billion as interest on deposits representing 35.58% of the Sacco sub-sector total income.

An analysis done by Sacco Societies Regulatory Authority (SASRA) that was published in the Annual Supervision Report released last year shows that DT-SACCOs paid on average 6.01% interest on the deposits in 2020, which is a drop from an interest rate of 6.72% paid in 2019. 

However, the rate was high compared to the banking institutions that paid an interest rate of about 3.42% on customer deposits.

“DT-Saccos by far remained comparative competitive financial deposit-taking institutions. The dividends earned on the share capital held by DT-Saccos was 8.26% in 2020 compared to 9.11% earned in 2019. The drop in the rate of dividends paid was generally engineered by the need to retain more surpluses to build institutional capital, especially in the wake of uncertainties associated with impacts of the COVID-19 pandemic,” said SASRA.

Saccos are fully embracing the use of ICT and other technologically enabled mobile devices in their operations and service provision, which is expected to raise their competitiveness in the market.

The Authority licensed three new Saccos to undertake deposit-taking Sacco business last year, raising the number of regulated institutions to 175 from 172. The new licensees that commenced operations in 2020 were Ushuru Sacco, Kimisitu Sacco, and Acumen Sacco.

“The Authority continued to maintain surveillance in the market to ensure that there was no violation of Section 23 of the Sacco Societies Act, which prohibits any person from undertaking deposit taking Sacco business without a valid license issued by the Authority,” the report reads.