- Rural Saccos are helping low-income Kenyans embrace saving and access credit for investment.
- Financial literacy is encouraging women’s and self-help groups to build savings and creditworthiness.
- Researchers are calling for stronger policies, digital services and partnerships to expand rural Saccos.
Community based Savings and Credit Cooperative Societies (Saccos) have been described as a key foundation for building a culture of saving, easing poverty by drawing Kenyans into commercial ventures.
Campaigns to dispel the misleading belief that only the formally employed can join the cooperative movement, together with the current friendly commercial offerings, have raised interest among rural and ordinary Kenyans.
Research by two scholars from the Jomo Kenyatta University of Agriculture and Technology, Muthoni Muchiri and Dr Maurice Sakwa, focused mainly on Kirinyaga County. It revealed the need to start more Saccos in rural areas to spur the economy.
Community members with information on Saccos had set up more formal ways of handling their finances, regardless of the source of the money, compared with those who lacked it. After basic lessons on Saccos, the researchers found that beginners learned the basics of saving, specifically to build creditworthiness. This happened at the level of women’s and self-help groups, which dominate rural Kirinyaga and other parts of the Mt Kenya region.
“Community based Saccos play a significant role in poverty alleviation in rural parts of Kirinyaga County, first through favourable loan conditions and charges that enable low income individuals to access credit for investment,” the researchers said.
Access to various loan packages for investment helped beneficiaries improve their incomes and, in turn, their quality of life. The findings showed that savings mobilisation within Saccos encouraged capital formation. Members borrowed this capital to fund investments, which then expanded.
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Employment opportunities also grew as community members expanded their income generating enterprises under Saccos. The enterprises attracted experts who offered literacy and investment training to members.
“When earnings grow, improved Sacco investments enhance local job chances, improving living conditions and sustaining economic growth further,” the researchers noted.
Saccos also contributed significantly to economic empowerment and inclusive growth. This has entrenched them as agents in the fight against poverty.
According to the researchers, however, further policies and laws are needed to legitimise Sacco operations. Such measures would make it easier for members to borrow more often and to access larger loans outside the Sacco systems.
The two researchers also suggested that rural Saccos should open up their interaction with the government and non-governmental organisations (NGOs) to strengthen the importance of cooperatives. They noted that using government cash transfers through Saccos could expand their capacity and raise interest among rural community members.
Experts could also encourage joint ventures with Saccos, where larger resources would be pooled. Communities could then venture into bigger, more sustainable projects that generate greater income and employment opportunities.
“This collective approach not only maximises the potential of individual contributions but also fosters a sense of community and shared purpose,” the researchers added.
They also stressed the need to adopt digital systems to improve transparency and accessibility. This would help members participate more fully and manage their financial activities and resources profitably. “Digital platforms could be used to streamline the processes of saving and borrowing, ensuring that Sacco services become more user friendly and widely accessible,” the researchers concluded.
By Robert Nyagah
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