Member’s Concern: Is it right for a Sacco to deduct my dividends?
Expert’s Take: When it comes to retaining dividends, it is important to understand the reasons behind it. If a SACCO has deducted your dividends, it may be because it was agreed upon during the ADM (Annual Delegates Meeting) or AGM (Annual General Meeting). Essentially, this means that the SACCO is ploughing back your dividends to earn member dividends at the end of the year, as they make up part of your deposits or additional shares.
Retained earnings are part of the SACCO’s equity, and since increased equity increases assets, retained earnings increase the assets of your SACCO. This means that the member is not losing their money, but rather the SACCO is looking to boost its reserves without having to go out to raise Share capital or borrow somewhere, especially from banks, which would go against their core responsibility of savings and credit.
In summary, retaining dividends is a common practice that SACCOs use to increase their equity and assets, which ultimately benefits their members. If you have any further questions or concerns about retained dividends, it is always best to consult with your SACCO directly.
