By Munene Maina
Saving and Credit Co-operative Societies (Sacco) still command the lead in offering highest interest on savings and dividends to members annually, latest industry report shows.
The Sacco Supervision Annual Report, 2018 released by Sacco Societies Regulatory Authority (SASRA) in August this year noted that Deposit-Taking (DT) Saccos paid an interest on the deposit at an average rate of 7.10 per cent in 2018 compared to an average rate of 6.95 per cent paid in 2017.
The share capital on the other hand attracted dividends at the rate of 9.40 per cent in 2018 compared to an average rate of 8.34 per cent paid in 2017 according to the report.
“Whereas the rates of returns paid by DT-SACCOs remained relatively on an upward trajectory, the rates of interest paid by banking institutions of the banks savings fell to 5.13% in 2018 from a high of 6.91% recorded in 2017,” the report noted.
On the other hand there was increase on the rates of interest paid by the DT-Saccos in the savings which increased to 7.1 per cent in 2018 from 6.95 per cent in 2018.
SASRA noted in the report that with the removal of the cap on the minimum interest rate payable on bank savings vide the Finance Act, 2018; it is expected that DT-Saccos shall continue to pay attractive returns on members’ savings than the returns paid by banks on their customers’ savings.
SACCOs normally pay interests on the members’ deposits and dividends on members’ share capital at such rate as may be proposed by
Saccos’ board of directors usually propose rebates and dividends payable to members and members approve the same during annual general meeting. A Sacco is required to make a surplus before declaring any payments to members.
A survey done by this paper in July based on information and data obtained from financial statements of DT Saccos showed that some paid dividend on shares of up to 25 per cent and interest on deposits above 17 per cent.
