Saccos with bank loans can expect cheaper borrowing as interest rates fall, but tougher competition for member loans is coming.
Regulated Saccos owed commercial banks a combined Ksh25.64 billion at the end of 2025. This is according to the Sacco Societies Regulatory Authority (SASRA) in its Sacco Supervision Annual Report, 2025. Because that debt tracks the Central Bank Rate (CBR), any drop in the benchmark directly reduces what these societies pay. SASRA says the rate has been trending down since the second half of 2024.
Many Saccos are already leaning less on outside credit. Deposit taking Saccos cut their external borrowing to 2.42 percent of total assets in 2025. That compares with 2.51 percent in 2024 and 3.02 percent in 2023. Even at its peak, the figure stayed far below the regulatory ceiling of 25 percent. Non withdrawable deposit taking Saccos moved the same way, with their ratio sliding to 1.29 percent from 1.46 percent a year earlier.
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Looking ahead, SASRA expects the lower CBR to feed through into commercial bank lending rates. As a result, Saccos that still carry bank loans should see their borrowing costs ease in the short to medium term. Even so, the regulator has not changed its long held advice. Saccos, it says, should fund their loan books from internally generated money rather than bank credit. The steady fall in borrowing ratios across both groups suggests many are listening.
Still, cheaper money is not all good news for Saccos. Banks and other lenders are also paying less to lend, and that lets them chase the same borrowers Saccos depend on. Small and medium enterprises (SMEs) are the most exposed, since they are quick to move where credit is cheapest. For years, competitive loan pricing has been a core strength for Saccos. Now rivals are positioned to undercut it.
For that reason, SASRA is urging Saccos to take a hard look at their credit products. The regulator wants them reshaped around what members need today. Those that stand still, it warns, risk watching member borrowing drift to other lenders.
By Benedict Aoya
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