In a significant development, Saccos have achieved a major milestone by crossing the Sh1 trillion mark in member deposits. Despite economic challenges prompting some withdrawals for immediate needs, the State Department of Cooperatives reports a robust 15.6 percent surge in savings, reaching Sh1.047 trillion in the year to June 2023 from Sh906 billion.
This remarkable growth is attributed to heightened member confidence and increased accessibility to financial services through digital channels adopted by Saccos, according to the State Department.
Surpassing the targeted Sh950 billion for the year by Sh141 billion, this uptick in deposits highlights the growing influence of Saccos in the economy. Members are not only accumulating savings for future needs but are also leveraging loans for personal and economic development.
Despite prevailing economic hardships, Saccos demonstrated an impressive pace of growth, mobilizing an average of Sh11.75 billion in fresh deposits monthly. This growth surpasses the previous year’s 7.1 percent increase, indicating a noteworthy acceleration in deposit mobilization.
The surge in savings underscores the need for a Deposit Guarantee Fund (DGF) to protect savers from potential losses in case of a Sacco collapse. Although provided for in the Sacco Societies Act of 2008, the DGF is yet to be established.
Savings in Deposit-Taking (DT) Saccos exceeded expectations, growing from Sh474.25 billion to Sh522.59 billion by the end of June, surpassing the Sh490 billion target. Non-Withdrawable Deposit-Taking (NWDT) Saccos also experienced substantial growth, reaching Sh97.86 billion from Sh90.64 billion, surpassing the targeted Sh91 billion.
Sasra, the regulatory authority, attributes this success to improved member confidence, branch expansion, and the adoption of alternative service delivery channels by regulated Saccos.
Beyond DT and NWDT cooperatives, other Saccos closed June with Sh426.55 billion, marking a noteworthy 25 percent growth from Sh341.11 billion.
The appeal of Sacco savings lies in higher returns compared to commercial banks. Regulated Saccos paid an average interest rate of 6.92 percent on members’ deposits last year, while commercial banks averaged three percent. This dual comparative advantage solidifies the attractiveness of Sacco savings, allowing members to earn interest and use their savings as collateral for loans.
Sasra data from the end of December last year revealed a significant 29.6 percent growth in Sacco accounts holding more than Sh1 million—the fastest pace in five years. The 92,000 accounts, representing 0.63 percent of the total 14.52 million accounts, held Sh163.28 billion or nearly a third (31.2 percent) of the Sh522.59 billion deposits held by 359 Saccos regulated by Sasra. This data underscores the strength and appeal of Saccos within the financial landscape.
By: Montel Kamau
Serrari Financial Analyst
20th December, 2023
