1. What is a SACCO?
A SACCO (Savings and Credit Cooperative Organization) is a member-owned financial institution where individuals pool their savings and provide loans to each other at reasonable interest rates. SACCOs are built on trust, cooperation, and mutual benefit.
2. Who can join a SACCO?
Anyone who meets the membership criteria of a particular SACCO can join. Most SACCOs are formed around a common bond such as employment, locality, faith, profession, or institution. The requirements usually include an ID, registration fee, and regular savings.
3. How do SACCOs differ from banks?
SACCOs are owned and governed by their members, while banks are profit-driven institutions owned by shareholders. SACCOs focus on member welfare, offer lower loan interest rates, and return profits to members in the form of dividends.
4. How do I benefit from joining a SACCO?
As a member, you gain access to affordable loans, earn dividends on your savings, receive financial literacy, and participate in the governance of the SACCO. You also get a support system for emergencies and future financial planning.
5. How much do I need to save to qualify for a loan?
Most SACCOs require members to save consistently for a set period (typically 3–6 months) before qualifying for a loan. The loan amount you qualify for often depends on your total savings and your ability to get guarantors from within the SACCO.
6. What is a guarantor, and why is it required?
A guarantor is another SACCO member who agrees to be responsible for your loan in case you default. This peer-guarantee system ensures accountability and minimizes risk for the SACCO since members are accountable to each other.
7. Can I withdraw my savings anytime?
This depends on the type of savings. Regular shares (used to guarantee loans) are often locked for long-term use. However, SACCOs may offer flexible savings accounts (e.g., voluntary or fixed savings) that allow for partial or full withdrawal with prior notice.
8. What happens if I fail to repay my loan?
If you fail to repay your loan, the SACCO may recover the amount from your guarantors or from your savings. Continued default may lead to penalties, loss of membership, or legal action, depending on the SACCO’s policies.
9. How are SACCO profits shared?
Profits earned by the SACCO from interest and investments are shared among members at the end of the financial year. Members receive dividends based on their shares, and some SACCOs also issue rebates on loan interest paid.
10. How can I become a leader or committee member in a SACCO?
SACCO members can contest for leadership positions during general elections, usually held at the Annual General Meeting (AGM). Candidates must meet eligibility criteria such as good standing, financial discipline, and active participation.