Making sound financial decisions is a critical skill, whether you’re a young entrepreneur looking to build wealth or a corporate professional striving for financial independence.

Strategic financial planning and leveraging the right financial tools determine your long-term success and stability. One such avenue that has proven highly effective, particularly in Kenya, is the Savings and Credit Cooperative Society (Saccos).

Saccos have been instrumental in shaping the financial landscape for individuals and businesses. Unlike traditional banks, they offer affordable loans with extended repayment periods, allowing members to navigate economic downturns effectively.

For young entrepreneurs or corporate individuals aiming for financial independence, Saccos provide a reliable platform for significant financial gains.

The cooperative industry, according to business executives, has contributed to the success of more businesses and individuals than most financial institutions globally. Solomon Atsiaya, Chief Executive Officer (CEO) of the Kenya National Police DT Sacco, notes that despite tough economic times characterized by high operational costs and reduced disposable income, many businesses in Kenya have remained resilient.

This resilience is largely attributed to the availability of affordable loans with flexible repayment terms, which enable individuals and businesses to absorb economic shocks adequately.

Structured saving options

“In this country, the highest saver could have about Sh 150 million or Sh 170 million. That’s a lot. And by the way, if you didn’t know, the cooperative sector has more millionaires than those who hold bank accounts,” Atsiaya said during a stakeholder briefing on Monday.

According to him, Saccos foster financial discipline through structured savings plans, a model that even banks have tried to replicate.

“This is one of the models we need to support because it is the only model that will help us create as many millionaires as possible in this country. Personally, any money sitting in my bank account is at risk of being spent unnecessarily. But whatever is in my Sacco—if I put in Sh 2,000 today and add more later—I’m building my wealth,” he stated.

Young people who have embraced Sacco savings have also attested to its long-term benefits. Elizabeth Anyango, a 26-year-old office clerk at a Nairobi-based organization, shared her experience: “The good thing about saving in Saccos is that you can get loans up to three times your savings or shares, with ample repayment time. This allows you to repay without being left empty-handed. I’m even planning to buy a piece of land through my Sacco.”

Many young people, upon earning their first income, prioritize short-term luxuries such as fashion and accessories instead of securing their financial future.

“Kenya is among the best economies in Africa, but we still need to deepen our financial culture, particularly among the youth and children,” Atsiaya advised.

He believes Saccos are key to wealth creation for the youthful population, terming them the “basic ingredient” of financial stability.
Joseph Mathenge, a business owner, highlighted how his Sacco played a crucial role in growing his business.

“I remember when I got a tender to supply 200 size-five footballs to an organization. I didn’t have enough capital, so I reached out to my Sacco and got a loan of Sh 200,000. I knew I could get the loan because I had been taken through the process when I joined. I would encourage people to embrace saving in Saccos,” he explained.

Saccos have significantly improved the lives of their members, helping them realize their economic potential. Citing several Saccos, Atsiaya revealed that members have collectively received Sh 4 billion in share payments.

Why Saccos are stable

“For instance, the Police Sacco has issued loans amounting to Sh 51 billion. That money has been used to pay school fees, provide housing, and keep businesses running. How much have these members saved? Only Sh 31 billion,” he noted.

Despite the discrepancy, Saccos remain financially stable due to their initial capital investments, even if individual members withdraw their contributions.

“When we distribute Sh 4 billion in dividends, we also retain institutional capital. Saccos are required to hold at least 10% of their capital in reserve. This capital comes from member contributions and retained earnings,” Atsiaya explained.

Importance of Saving in Saccos

Saving in Saccos is a crucial financial strategy with numerous benefits for individuals and businesses. Unlike traditional banks, Saccos offer higher interest rates on savings and more favorable loan terms, making credit more accessible without the stringent requirements imposed by commercial banks. This accessibility is vital for young entrepreneurs, startups, and individuals looking to achieve long-term financial stability.

One of the biggest advantages of Saccos is financial discipline. The requirement to make regular contributions instills a culture of consistent saving, helping members accumulate substantial funds over time. This ensures financial security during emergencies or when making major investments such as purchasing land, expanding a business, or funding education.

Additionally, Saccos foster a sense of community and shared financial growth. Members benefit from dividends and profit-sharing schemes, allowing their savings to grow while also supporting the collective economic welfare of the Sacco. This cooperative model promotes mutual financial empowerment.

Moreover, Saccos play a vital role in economic development by providing accessible funding to businesses, stimulating entrepreneurship, job creation, and overall economic growth. By prioritizing Sacco savings, individuals not only secure their financial futures but also contribute to a more stable and prosperous economy.ributes to the growth of the economy, a factor that many young people are not really aware of.