The Evolution Of SACCOs Into Investment Institutions

Co-operative societies in Kenya date back to 1908 when the first co-operative society was established.  They have since continued to grow, with upwards of 23,000 registered cooperatives in the country presently.

Cooperatives provided its members’ crucial services which they weren’t able to access from banks and other financial institutions at the time. The primary role of savings and credit co-operatives (SACCOs) was to receive savings contributions from members while offering credit facilities.

However, over the years SACCOs have found themselves commanding larger percentages of savings. In June 2018, members’ deposits in SACCOs grew by Kshs 76 billion, reaching a total of Kshs 766 billion from Kshs 690 billion recorded the year before.

In light of such widespread acceptance, more and more SACCOs are seeking to offer greater value to their members. They are evolving and incorporating investment activities into their operations. Aside from providing credit facilities, several SACCOs now invest in projects and products that offer returns, which they then distribute to members.

One of the key investment products that SACCOs have been keen on is short term debt securities. These are investments that are expected to be sold and converted to cash within one year or the Sacco’s operating cycle. A good example of these is money market funds, which are an attractive option because they provide capital preservation needed when dealing with members’ money. MMFs also offer excellent cash access and give higher interest rates compared to bank deposits.

This evolution of Saccos from just providing a platform for savings and credit facilities to generating good returns on surplus funds is a step in the right direction. It also ensures the members’ money grows, giving them the best value.

Are you a Sacco seeking to know how to maximize your savings, contact us and we will walk you through how to achieve this.

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