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Corporate Interview: how Saccos are changing people’s lives in Kenya


Kenya has the third largest financial sector in Sub-Saharan Africa. This sector makes a significant contribution to economic growth and development.

Suffice to say the cooperative movement that was started in the 1970s is a core part of it. Business Beat talked to Peter Kariuki the CEO of Kimisitu Sacco who gave us some insights on how Saccos are changing people’s lives in Kenya.

You have been an insider in the cooperative movement for a while. Tell us, what is the key role that Saccos play in the economy?

The World Council of Credit Union 2015 Statistical Report shows that Kenya’s Sacco movement has over five million members making it the largest in Africa. Of the total savings mobilized and loans advanced by Saccos in Africa, Kenya’s Saccos contributes over 61 per cent of the savings and 68 per cent of the loans. Over 30 million Kenyans depend on the co-operative movement for loans. Saccos are a source of employment to youth and women, provide revenue to the government inform of taxes, offers affordable credit to SMEs and above all, they are an avenue for financial inclusion.

Common bond has been identified as a key challenge to the entry of more Kenyans into the Sacco movement. How has this affected the growth of the Sacco membership in the country?

This was an impediment in the past. Today, in line with changing financial landscape in the economy, Saccos have woken up to the reality that the issue of restrictive membership to a common bond is old-fashioned and out-of-touch with the evolving and dynamic financial sector. Sacco Societies Regulatory Authority (SASRA) supervision report 2015 indicates that majority of SACCOs have opened their bonds. The report goes further to indicate that Saccos which have opened their bonds are performing better than those that have stuck to it.

Last year, the Banking (Amendment) Bill 2015 was assented to by the President effectively capping lending rates at four per cent above the Central Bank Rate, while the minimum deposit rates will be 70 per cent of the Central Bank Rate. Do you think this will have any adverse effect on the Saccos sub-sector?

No! Because Saccos are not business entities per se, and members are shareholders who actively participate in the decision making at the Annual General Meetings and at the same time they patronize Sacco products. Since Saccos mobilize members’ savings and offers them interest on deposits and dividends on shares (regardless of loan status) makes them more competitive than other players in the financial sector. This offers them an opportunity to pool together desired deposit for lending to members at an affordable rate than the prevailing market rate. Generally, Sacco loans are charged a lower interest rate on reducing balance.

The demand by Sacco members to acquire property especially land and houses through Saccos has been on a steady rise. What do you think Saccos should do to ensure that members can purchase land and construct houses at an affordable rate without diverting from their core business?

Under the Social Strategy of Kenya’s Vision 2030, housing is one of the seven key pillars. It is envisioned that by the year 2030 Kenya will be a predominantly urban nation. Shelter is therefore a major necessity to every Kenyan especially those living in cities where house rent takes a huge portion of their monthly income. The real estate sector offers Saccos a great opportunity to offer members affordable financing options to buy land for building their own homes. I think Saccos should come up with innovative products where members are financed wholly at 100 percent with longer repayment period and at a competitive interest rate.

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