A glance at the financial statements for the year ended 31st December 2024 for most deposit-taking SACCOs that have already published their accounts shows that many of these societies have maintained the rate of dividend and interest on members deposits or rebate payments to their members.
These returns have been attributed largely to a harsh economic environment that prevailed in 2024, characterized by new taxes and levies, all wiping out incomes of the mostly low-income earners who also form the bulk of members of financial cooperative societies.
A number of SACCO Annual Delegates Meetings (ADMs) held so far, beginning this January across the country, have witnessed stormy sessions with members demanding higher dividend payouts and rebates. Others get agitated when any amount of cash earned is plowed back into the business.
As such, a large number of DT Savings and Credit Cooperative Societies have maintained a flat rate in dividends and rebate payments while increasing the size of their balance sheets and posting increased surplus income as well as putting more cash aside as reserves.
This is despite the gloomy economic conditions that have seen a decline in business and income flows.
“The past year was extremely tough for our business, with all manner of challenges, but we were resilient and managed to make it through. We maintained the same level of dividend payout to our members, who remained very loyal. We are stick knocking on the doors for new business while also launching new products and services,”. Luncham Mugambi Nthigai, Chief Executive Officer of Trans-Nation DT Sacco, told SACCO REVIEW in an interview.
YOU CAN ALSO READ:
He said SACCOs were not hurt by the harsh economic times due to the fact that these societies trade with members who are also the owners of the business.
Trans Nation Sacco maintained its Dividends Rate at 15% and Rebates at 12.5%, the same as the rates paid out in 2023. The Society is looking ahead with better prospects in 2025 and has even gone ahead to open a new branch in Kitui.
“The regulator has advised against maintaining high dividend payouts. We are now educating our members on the need for the Society to build up its reserves and that dividends cannot be seen as the only yardstick in measuring the financial success of a SACCO. While payment of dividends is not a legal requirement in Saccos, the payout acts to increase the propensity for members to save more with the Society,” said Mugambi.
Mugambi is urging members of all DT Saccos in Kenya to strike a balance between getting a fair return on their investment and building a resilient business enterprise that can survive unforeseen shocks and survive for the future.
“We are already planning to have comprehensive and powerful member education forums through our social media team so as to counter the negative vibes on these platforms about who is the highest dividend payer and other lies being peddled. While we operate in a free market where dividend payouts by SACCOs are not capped, there is a need to be honest with members and tell them that certain high payouts are not sustainable or good for business, “said Mugambi.
“We continue to experience a highly depressed economy characterized by high taxation resulting in a high cost of living that is causing uncertainty in the social economic environment. Notwithstanding the challenges, it is yet another year of impressive performance in our business, including a strong financial and profit position,” Mr. Wesley Ngeno, Simba Chai DT Sacco Limited, told members during its recently held Annual Delegates Meeting (ADM).
Simba Chai DT Sacco paid a fat dividend cheque to its members amounting to KSh 97m in rebates in 2024, up from KSh 93.2m in 2023, a flat rate of 10.5%, the same as that in 2023. Also, the Sacco gave out a dividend payout of KSh 6m in 2024, equal to 10.5%, which is the same as the rates paid out in 2023.
While addressing this 42nd ADM of Simba Chai DT Sacco, its Board Chairperson said, “This year has been challenging in its own unique way, especially in the economic environment. However, we have continued to be resilient, as shown by the increased surplus posted in 2024.”
Interestingly, some top executives of the big boys in the Sacco business who spoke to this publication cite the huge provisions they made for their lost investments in the now insolvent Kenya Union of Savings and Credit Cooperatives (KUSCCO) as the main reason for the flat returns to members.
Meanwhile, 2024 saw the SACCO subsector in Kenya continues to grow, with regulatory advancements, increased financial literacy, and stakeholder collaboration driving the growth. This is according to the 7th edition of the FinAccess Household Survey 2024 edition, which found that Kenya’s SACCO subsector is growing.
By Jackson Okoth
Get more stories from our website: Sacco Review.
For comments and clarifications, write to: Saccoreview@
Kindly follow us via our social media pages on Facebook: Sacco Review Newspaper for timely updates
Stay ahead of the pack! Grab the latest Sacco Review newspaper!
