Saccos, the New Corruption Vehicles Propelling Greedy People to Instant Riches

By SokoDirectory Team / March 12, 2019




Saccos in Kenya are said to be controlling over 1 trillion shillings, almost a third of Kenya’s national budget in terms of contributions from members as well as other investments.

For many years, these co-operative societies have continued to be the safest investment vehicles where individuals could invest their money with assured good returns. Saccos have also continued to be the most affordable avenues for cheap and affordable loans for millions of their members.

The lucrative profits that have been coming with Saccos have brought to the mushrooming of thousands of Saccos across the country recruiting hundreds of thousands of members, the majority of them low-income members.

Kenya has over 22,000 registered co-operative societies, with thousands others unregistered with an estimated 14 million Kenyans as members controlling over 1 trillion shillings in members’ contributions and deposits.

READ CS Matiang’i Warns Heads of Rogue Saccos of Crackdown

Why People Have Been Preferring Saccos

Most Kenyans, for a very long time, preferred investing in Saccos over other forms of investments. According to most Kenyans, Saccos have the following benefits for their members:

  • They are flexible. Members are given a wide range of investment opportunities including different levels of contributions. For most Saccos, the minimum a member can contribute is 1,000 shillings, affordable for most households across the country. Some Saccos require their members to pay as little as 500 shillings in contributions.
  • Easy to get a loan. Members of Saccos have easy access to loans from their own Saccos as it is if they wanted the same from commercial banks. The tiring procedures in getting a loan from commercial banks pushed many people to join Saccos where there are minimal restrictions when it comes to requesting for a loan.
  • Affordable loans. Saccos are known to be giving their members loans that are affordable with low-interest rates as compared to what is charged by commercial banks.
  • Investment opportunities. Most Saccos invest on behalf of their members. This gives members an opportunity to get returns out of their contributions.

Therefore, the main reasons why Kenyans choose to invest in Saccos are:

  • Flexibility
  • Investment opportunities
  • Easy to get loans
  • Cheap and affordable loans
  • Saving vehicles

Corruption Vehicles

Things in the Sacco sector have changed. The sector will soon come to its knees if something is not done to salvage the situation. Most Saccos are now reeling under the massive weight of mismanagement and outright fraud from boards and managers.

Billions of shillings belonging to members in terms of savings have either been lost or at the verge of being lost as more Sacoos continue to run into financial turbulence.

Ekeza Sacco, for instance, is said to have defrauded its members a total of 1.5 billion shillings. Thousands of members belonging to the troubled Sacco are a worried lot even as the government works towards selling assets belonging to the Sacco owner to pay members.

Members in Ekeza were promised good returns in terms of plots, houses, and loans among other benefits upon investments. Thousands of people, mainly from the Central region of Kenya, joined the Sacco, made deposits and within months, the amount was above 1 billion shillings. The founder of the Sacco, David Kariuki Ngare is said to have transferred 1.5 billion shillings to his personal account which he insisted he ‘just borrowed’ to invest for ‘his members.’

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Stats show that three Saccos; Mwalimu Sacco, Ekeza Sacco, and Stima Investments Co-operative are estimated to have either defrauded or led to the loss of more than 3.6 billion shillings mostly through mismanagement and corruption by the top management.

Stima Investment Co-operative shocked many Kenyans when it was revealed that members might have lost more than 500 million shillings to mismanagement and corruption. Stima is among the largest Saccos in Kenya and one that has been a preference for many.

It is evident that Saccos are now becoming a risk investment venture where people are setting them up with a goal of collecting money from members and then defrauding them.

According to official records, Saccos employ more than 500,000 Kenyans with 1.5 million others depending on them indirectly. All Saccos combined are estimated to have at least 732 billion shillings in members’ deposits and savings with and base of more than 1 trillion shillings.

What you should look for before investing in a Sacco

Before investing your money into a Sacco, consider the following:

  • Is the Sacco registered? If the Sacco is registered, in the event of it going down, as a member, you will be assured of an intervention from the government.
  • What is the history of the Sacco? With the enhancement in technology, it is easy to get information about Saccos online. Look if there are any complaints about the Sacco. Has it ever defrauded anyone? How does it handle contributions from members? How are the contributions invested?
  • Get in touch directly with some members. Look for some members already investing in the Sacco. Ask them about the Sacco without necessarily telling them that you want to join. Avoid asking the management because they might not give you the correct information.
  • How is the deal? What is the Sacco promising? Is it making realistic promises? They say if the deal is too good, always know it is time to think twice. If the Sacco is promising you instant riches, please take off and do not look back.
  • Avoid online Saccos. There are Saccos that require you to join them and make your deposits online without even you meeting any of their members or management. Invest in a Sacco you know and one that you can reach physically in case of a problem.




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