MEMBER VOICES
Trust is a fundamental pillar for the success and sustainability of Savings and Credit Cooperative Organizations (SACCOs). However, several issues can undermine trust in SACCOs, affecting their credibility, member confidence, and overall operations.
Inefficient loan processing, delays in loan approval, unfair loan allocation, and poor loan recovery mechanisms can frustrate members and effectively erode their trust.
Simon Charo, a trader at Kongowea market in Mombasa, had to request that his SACCO suspend a loan he had applied for due to delayed approval and processing. Charo, who sells mainly second-hand children’s clothes, wanted to purchase more stock to take advantage of the market boom during the back-to-school season. However, he was greatly disappointed when the SACCO failed to process the loan in time.
“At the time the SACCO notified me of the loan, the market rush had settled down, so I requested that it be suspended because the timing wasn’t favorable for my business,” Charo said.
The SACCO, which has a branch in Mombasa but is headquartered in Nairobi, took over a month to process a loan of Ksh 300,000. To his dismay, he was told that he would need to pay Ksh 4,500 to have the process suspended. According to the SACCO, suspending a loan is subject to additional protocols, for which the applicant must cover the costs once a loan has been processed.
Despite his frustrations, Charo, who remains a member of the SACCO, agreed to share his story on the condition that the SACCO’s name not be disclosed. He hinted at the possibility of leaving the SACCO for another one that offers timely services and better customer care.
Another trader, Jane Wanjohi, who owns a vegetable stall in Bombolulu, has never considered joining SACCO after she lost money to a credit facility called 4G. Two years ago, Jane was approached by field officers at her stall and agreed to register with the facility, which promised cheap loans for a registration fee of only Ksh 500. Needing funds to expand her business, she applied for a loan of Ksh 10,000.
Jane was supposed to make daily repayments of Ksh 200 over 60 days, which would incur almost 17% interest.
“I realized this was an exorbitant loan a few days later after calculating the costs; however, I committed to repaying it regardless,” she said. Jane added that the pressure from the officers, who demanded payments even on days when her business was slow, discouraged her from seeking loans from lending facilities. Instead, she prefers to join merry-go-round chamas as an alternative for raising business funds.
Mr. Ben also wants nothing to do with SACCOs after experiencing a similar situation to Jane’s. He felt harassed by his SACCO when he lost his job during the COVID-19 pandemic. Repaying his SACCO loan became a struggle, and although he requested a different repayment model, his request was denied. The constant threat of losing property due to unpaid loans from lending companies has kept him away from SACCOs. Currently, Mr. Ben relies on various hustles to keep his Frere Town food chain store running.
