Saccos must be guided by the cooperative principles to set them apart

The main reason for the establishment of a Sacco is to bring together members of the community with a common need.

The Saccos are based on the cooperative values of self-help, responsibility, democracy, equality, equity and solidarity.

These values are easy to maintain since the Saccos are formed by people who know each other very well. It implies that the Saccos are located in one area, making it almost impossible for outsiders to either join or access Sacco services.

However, some Saccos are influenced to fit in the global market in order to survive the high competition from other financial institutions offering similar products and services.

They are therefore required to increase revenues through mobilizing transactions and this can only be achieved through increased membership as well as covering large physical locations. Thus aggressiveness is just the new normal in the cooperative movement.

To some extent it is a measure of growth. However, the true meaning of Sacco business model should not be lost.

There should be a distinction between Saccos and other competitors in the credit and savings industry.

Saccos should always keep in mind that they are an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations founded on the seven guiding principles, which list as; open and voluntary membership, democratic member control, economic participation, autonomy and independence, education, training and information, cooperation among cooperatives, and concern for community.

As a result of this, Saccos should be member-centred and all their operations should always benefit the members.

As a matter of fact, additional branches come with both advantages and disadvantages. It is the responsibility of the Sacco to evaluate itself to ascertain whether they are stable enough to open more branches.

Members control the Saccos democratically and they should always be served effectively. If they are not ready to face the new challenges attached to the new branches, the management should always come up with other efficient ways to serve them.

Sacco managements have a responsibility to ensure the Saccos run as per their budgets and the same ought to have been approved and passed by their members in a properly constituted Annual General Meeting (AGM).

In all circumstances, the Saccos should stick to their core businesses of taking members’ deposits and lending. They should be sober enough before undertaking such decisions of such a huge effect on their members. The relevant feasibility studies must be done and the members informed and educated about them before establishing these branches and satellites.

The initiative should be controlled and maintained as per the Sacco’s capabilities and member preferences. The cooperative movement and the regulator should help the Saccos nurture the existing branches and satellite offices to ensure they build strong institutions and avoid establishing several weak points that may not last long.

It would be advisable for Saccos to embrace the new technologies that minimize costs, even as they invest in mobilizing more savings and deposits through their affiliate partners.

By Dorcas Nyambura Ndegwa

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