Wealthy Sacco members on the rise: What It Means for Kenya’s Economy. How Saccos Are Empowering Wealth Creation Among Members and why the Secret to Wealth Creation is Investing in Saccos. Sacco accounts with over Ksh1 Million grew faster at 29.10% – SASRA Report Shows.
The number of Sacco millionaires is fast rising, highlighting Saccos role in entrenching the saving culture, wealth creation and unlocking opportunities for members’ empowerment. Various studies show that Saccos offer higher savings rates and lower interest rates on loans, making it easier for their members to accumulate wealth. Since they’re not focused on making profits but on covering their operating costs instead, Saccos, just like other co-operatives, are able to offer better interest rates to their members.
Holistically, co-operative members enjoy better overall well-being, financial security, and trust in their community than non-members. A World Council survey revealed that co-operative members have improved access to social support systems and other resources supporting their resilience and ability to weather adverse events during times of need. The research further showed that women members gain independence and agency from co-operative membership. Co-operatives offer women training, support, and leadership opportunities with wide-reaching impacts on their well-being.
Through shared ownership, building wealth is a well-documented potential benefit of Sacco membership.
The Sacco Supervision Annual Report 2022 analysis showed that the Deposit-Taking (DT) Saccos held 92,000 deposit accounts with sums above the Ksh 1 Million threshold, cumulatively amounting to 163.29 billion, representing 31.25% of the total deposits held by the financial institutions.
“This represented an increase of 29.10% of the number of deposit accounts holding deposits of more than Ksh 1 Million which was reported at 71,000 deposits accounts in 2021, with total amount of deposits amounting to Ksh 135.26 Billion,” the SASRA report stated.
Saccos have become the place for higher-income earners looking for better returns on savings, which have seen accounts with over Ksh1 million growing fastest in the last five years. The total amount of deposits held in this cluster of deposit accounts increased by 20.72%. The number of accounts with hundreds of millions are on the rise too.
DT-Saccos non-withdrawable (BOSA) and withdrawable (FOSA) total deposits in the period under review amounted to Ksh522.59 Billion, held in a total of 14.52 Million deposit accounts. There were 176 registered DT-Saccos in the year.
“This analysis is thus a testament to the fact that the number of deposit accounts holding more than Ksh1 million grew at a faster rate of 29.10% in 2022 than all other categories of deposit accounts,” said SASRA. The growth rate in savings held in the deposit accounts with more than Ksh 1 Million recorded the highest increase of 20.72% in 2022.
The country’s 42-large-tiered DT-Saccos had the highest number of deposit accounts with more than Ksh 1 Million at 74.44%, while the 56-mid-tiered DT-Saccos accounted for 12.18% of the deposit accounts within the range. The 78-small-tiered DT-Saccos had only 3.74% of the deposits.
The top tier Sacco are more likely to attract and retain large amounts of deposit liabilities from their membership.
The number of deposit accounts holding between Ksh 50,000 and 100,000 increased to 349,000 deposit accounts in 2022, a 4.84% growth. However, there is a need for most Sacco members to increase their deposits to be covered under the proposed deposit insurance scheme that prescribed an insurable maximum deposit limit of Ksh100,00, which currently has the potential of covering 93.06% of all the deposit accounts, but only 10.84% of the entire deposits held by DT-Saccos according to SASRA. 90.66% of all the deposit accounts had deposits less than Ksh 50,000.
The Sacco sub-sector membership increased by 7.02% to reach 6.42 million in 2022, up from 5.99 million in 2021, with the active membership among the regulated Saccos standing at over 80% in the last two years. A large percentage of members were farmers, as Saccos largely depend on agricultural production and its value chains. Saccos, as co-operatives, are member-based financial institutions that strictly serve their membership.
The government has tightened its regulation in the co-operative movement, particularly in the Sacco subsector and the operationalization of the Sacco Shared Services and Central Liquidity Facility to enhance efficiency in savings mobilizations and credit to members is in high gear. The Deposit Guarantee Fund (DGF) is also in the pipeline, a deposit-insurance scheme to deepen public confidence and trust in investing in the Sacco industry.
The state also established the Sacco Societies Fraud Investigations Unit (SSFIU) in 2020, domiciled at SASRA, with the mandate of detecting, preventing, and apprehending offenders perpetrating fraud within the Sacco industry. So far, it has investigated and recommended prosecution in various fraud incidences, with multiple cases pending in courts.
