Why Kenyans Are Starting to Resent SACCOs: 10 Friction Points Pushing Kenyans and Working Households to the Edge

Kenya’s SACCO movement is big enough to matter—and that is exactly why its weaknesses now feel personal. Regulated SACCOs held about KSh 971.96 billion in assets in 2023 and grew member deposits to KSh 682.19 billion, serving 6.84 million members.  By 2024, the regulated sector had crossed KSh 1.07 trillion in assets, with deposits around KSh 749 billion and membership at 7.39 million.

The sector is expanding, yet the member experience—especially for younger Kenyans—often feels like a set of rules designed for a different era.

The first source of resentment is a structural mismatch between how Gen Z lives and how many SACCOs still operate. Young workers are increasingly informal, freelance, or gig-based, and they expect money to be liquid, portable, and self-directed.

But SACCOs were built around stable payrolls, predictable deductions, and long-term member lock-in. That cultural gap is now showing up as emotional backlash: “Why is my money treated like it belongs to the institution more than it belongs to me?”

The second friction point is share capital that is non-redeemable, and in many SACCOs, exiting means you can’t simply “cash out.” You may be told your share capital is transferable, not refundable, so you must find a willing buyer.

To members, that feels like being trapped in a market they never signed up to join. The finance logic is that share capital supports permanence and capital adequacy, but the human experience is: “I’m leaving, yet my money can’t leave with me.”

Third is the BOSA savings lock—the idea that savings in the back office account are not withdrawable on demand, and often become accessible mainly when you exit. For a young Kenyan juggling rent, school fees, emergencies, and small business float, that restriction reads less like “discipline” and more like “punishment.”

The result is that SACCO saving stops feeling like saving, and starts feeling like a mandatory deduction whose benefits are postponed indefinitely.

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Fourth is the psychological “loop” members complain about: to save is to deposit, but to access your own funds you must borrow. That’s not just a product structure; it shapes how people interpret fairness.

When members perceive that liquidity is intentionally blocked so that credit uptake increases, trust erodes—even if the SACCO’s internal balance-sheet logic is sound. In a high-cost economy, people want optionality, not a system that nudges them toward debt to reach their own money.

Fifth is the reality that most members primarily join SACCOs for cheaper credit, not for savings convenience. That’s not an insult to SACCOs; it’s a market truth. The 2024 FinAccess findings note that SACCO usage improved (from 9.6% in 2021 to 11.7% in 2024) partly because SACCOs offered relatively affordable loans during a period of higher interest rates. But it also means if your life isn’t credit-oriented—if you mainly want a flexible savings wallet or investment channel—the SACCO value proposition can feel thin, even frustrating.

Sixth is a governance and trust shock that has spilled into the public imagination: the KUSCCO scandal. When the cooperative “apex” institutions get accused of irregularities, it doesn’t stay technical—it becomes emotional contagion.

Citizen Digital reported illegal withdrawals of about KSh 6 billion linked to KUSCCO exposures, and noted that SACCOs and their members faced losses depending on their exposure.

Separately, reporting on a forensic audit tabled in Parliament described billions in questionable loans and mismanagement issues at KUSCCO.

For many Kenyans, that translates into a blunt conclusion: “If the custodians can’t be trusted, why should I lock my savings here?”

Seventh is non-remittance of deductions by employers, a uniquely painful SACCO problem because it creates “phantom saving.” A member sees deductions on a payslip, assumes they’re building equity, then discovers the SACCO never received the money.

SASRA’s 2023 reporting highlighted non-remitted funds as a recurring issue, with figures around KSh 2.57 billion cited for 2023 in media coverage of the SASRA report.

Even when a SACCO is well-run, that employer friction lands on the member as delayed loans, penalties, or distorted balances—fuel for resentment that feels deeply unjust.

Eighth is the fear created by license revocations and regulatory actions, which, while meant to protect members, also amplify anxiety. SASRA has in recent years revoked or failed to renew licenses for some SACCOs that could not meet prudential requirements or compliance obligations.

When members hear “license revoked,” they don’t parse technicalities—they worry about access, withdrawals, and whether their savings are safe. In a trust-based model, even a few collapses can stigmatize the whole sector.

Ninth is market concentration, which quietly worsens member experience. SASRA’s 2023 report showed that 53 large regulated SACCOs controlled about 73.34% of total assets, while 39 held about 65.27% of total deposits.

Concentration can mean stability at the top, but it can also mean smaller SACCOs struggle with systems, staffing, and compliance costs. Members in weaker institutions experience slower service, weaker digital platforms, and more rigid policies—then generalize that frustration to “SACCOs” as a category.

Tenth is the widening expectation gap around digital service. FinAccess-linked commentary points to rapid uptake of digital channels (USSD/apps/paybill/POS/ATMs) in how people interact with SACCO services.

Yet many SACCOs still deliver a bank-grade promise using manual processes, office queues, and slow dispute resolution. Gen Z doesn’t compare you to another SACCO; they compare you to M-Pesa speed, app clarity, and real-time notifications.

When SACCO platforms lag, the member concludes the institution is outdated, not merely “still improving.”

Beyond these ten, there is a “soft” but powerful driver: communication failures. Many SACCO tensions are explainable—capital adequacy needs share capital permanence; liquidity management needs predictable deposits; credit pricing depends on stable funding.

But if members don’t understand the why, policy feels like arrogance. People don’t hate complexity; they hate being kept in the dark.

There is also the guarantor culture, which—while central to cooperative lending—creates relational stress in younger networks. When loans depend on friends and colleagues guaranteeing each other, defaults turn financial products into social conflict.

In a generation already wary of messy obligations, that social cost becomes another reason to keep SACCOs at arm’s length.

Dividends and returns are another quiet trigger. When members feel their money is locked, they expect the reward to be clearly superior. But when dividends disappoint—or when members can’t easily compare net returns after fees—the narrative becomes: “My funds are trapped and the upside isn’t even obvious.”

Even the regulator has warned that SACCOs face intensifying competition and changing rate dynamics, which can pressure member returns and expectations.

Finally, there is a broader macro shift: banks and fintechs are actively attacking SACCO territory. In Kenya, media reporting has already framed this as banks targeting the SACCO sector as regulation tightens and as the sector crosses the trillion-shilling asset mark.

When alternatives become more convenient, SACCO rigidity feels less like “discipline” and more like “a bad deal.” None of this means SACCOs are obsolete. The numbers show the sector is still growing and still central to credit and savings mobilization.

The issue is that modern members want cooperative value without cooperative captivity—they want transparency, portability, and dignity in how their own money behaves.

If SACCOs want to win back Gen Z sentiment, they don’t need motivational speeches about “saving culture.” They need product redesign: clearer exit rules, more redeemable structures where feasible, flexible savings wallets alongside BOSA, faster dispute handling for non-remitted deductions, and digital experiences that feel native—not adapted.

The sector’s future will be decided less by how big the balance sheet gets, and more by whether the average member feels respected. In 2026 Kenya, a financial institution doesn’t earn loyalty by locking people in. It earns loyalty by making staying feel like the smartest, easiest choice.

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