From Classrooms to Communities: How Transformative Teachers Built Cooperatives, Empowering Communities. Kenya’s Teacher-Based Saccos are Key Players in Rural Economies and Financial Inclusion.
The Savings and Credit Cooperative Societies (Saccos) owe their existence to visionary teachers who came together in the late 1970s to enable themselves to save and access affordable credit. These teacher-based Saccos have become critical players in enhancing financial inclusion and shaping rural economies. Today, except for four counties, all of the country’s 47 counties have teacher-based Saccos, which have grown into regional financial powerhouses capable of financing businesses worth billions of shillings.
It’s worth noting that the Saccos have expanded their common bond, allowing Kenyans from all other sectors of the economy to join and access their innovative products and services. The teacher-based Saccos have allowed many teachers to realize their dreams of owning decent, affordable housing and financing their families’ educational aspirations. Furthermore, through education, training, and information, the Societies have become more financially literate and able to understand basic bookkeeping skills.
Despite the high percentage control, the teacher-based Saccos’ non-performing loan ratio declined from 11.82% in 2021 to 10.68% in 2022, signaling an improved loan recovery mechanism, according to the Sacco Supervision Annual Report 2022. However, it’s important to note that the mean NPL ratio for the Teachers-based DT-SACCOs is still too high for an industry that largely relies on check-off loan recovery mechanisms.
The teacher-based Saccos have the second-highest member proportion, with a membership of 1.44 million in 2022, up from 1.25 million in 2021. Out of the 42 large-tiered Saccos with an asset base of more than Ksh5 billion, 17 are teacher-based Saccos, demonstrating their ability to mobilize savings as well as extend affordable credit. The Sacco Supervision Annual Report for 2022 shows that the 40 teacher-based Saccos commanded a deposit portfolio of Ksh187.09 billion in 2022, up from Ksh169.36 billion the previous year, representing the highest percentage composition for any single regulated sub-sector.
It’s worth noting that the regulator has taken appropriate supervisory measures towards any unbridled expansion of common bonds by some of these SACCOs unless adequate loan collection mechanisms are first put in place. Overall, the teacher-based Saccos have emerged as the jewel in Kenya’s Saccos, profoundly shaping rural economies and enhancing financial inclusion.
