Intensive marketing and customer-friendly financial solutions have seen Saccos overtaking commercial banks in deposits and customer numbers.
Experts have attributed this revolution to adherence to guidelines set by regulatory bodies, including the Central Bank of Kenya (CBK), attractive loan interest rates, quick processing of loans, and favourable returns through interest and end of year dividend payments.
Sacco networks, the experts have said, remain deeply entrenched in wider rural parts of Kenya where banks are virtually non-existent.
Their only reach to the grassroots is through agency banking, giving Saccos the upper hand in marketing and recruitment drives.
Amidst the huge threat of cyber criminals targeting huge amounts of money in accounts held by Kenyans, the recent launch of a Ksh800 technology platform by the Cooperative Alliance of Kenya (CAK) to ensure safety of depositors’ funds has further boosted the confidence in the sector.
Leading cooperative consultant and former Commissioner of Cooperatives Geoffrey Njang’ombe defends Saccos as one of the key pillars of the country’s economy, observing that the entrenchment of the rules at the counties will spur the expansion of the customer base even more.
While it has been appreciated that Sacco and micro-financial entities control better customer numbers than commercial banks, Njang’ombe notes that under devolved regulations, customer bases will expand as the economy improves.
“When counties embrace Saccos, customer levels will expand as well as facilities and that will spur financial stability of the entities, spur general development of the economy and create confidence among customers,’’ said the former Commissioner.
He adds that the future of the Sacco sub-sector remains bright, challenging the ordinary small and medium enterprises and farmers to venture into Saccos.
Latest statistics indicate that Saccos offer some of the biggest loans often incomparable to banks, with the successes achieved through widespread and elaborate marketing campaigns.
Such campaigns sometimes employ person to person interaction as old customers are offered rewards to market financial services to friends and colleagues at work or businesses.
Although urban areas dominate customer statistics, the Sacco push for rural clients has been commendable especially in emerging trading centres and small towns where they have been recruiting customers and opening outlets.
The CBK records indicate that loan growth in Sacco and microfinance outlets increased to Ksh63.3billion in 12 months to January 2022 as compared to Ksh37.3 billion issued by commercial banks over the same period.
Saccos controlled up to 73.2 per cent of total loans, while banks only took 9.3 per cent.
In the last five years, number of accounts holding more than Ksh1million rose by 29.6 per cent from 39,000 to 92,000 as shown by Sacco Society Regulatory Authority (SASRA) reports, an indication of financial might and stability in the cooperative sector.
According to SASRA, 93.06 per cent of the 14.52 million accounts were holding up to Ksh100,000, compared to commercial banks which held only 2.9 per cent of the deposits above Ksh100,000.
CAK’s chief executive Dan Marube is confident that the funds protection technology platform named Co-op Tech, where Saccos are already paying subscription fees of between Ksh350,000 and Ksh500,000, will encourage new entrants into the sector.
Marube assured that the platform will in future improve Saccos’ ability to manage resources, improve efficiency and create better products and solutions according to their needs.
By Robert Nyagah
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