The Importance Co-operatives

Co-operatives create the opportunity for people to take responsibility for their own financial organisation. The democratic process is an integral part of the co-operative and encourages people to take control of their own financial affairs. Among the many advantages of SACCOs are:

• Savings are mobilised locally and returned to members in the form of loans. The ideal model invests 80% of mobilised savings to members in the form of loans. The money stays and works within the members.
• SACCO interest rates on both savings and loans are generally better than rates given by banks and the reason for this is that SACCOs have very low overheads as compared to banks who pay low interest on savings but charge a lot of interest to cover their overheads.
• SACCOs encourage members to save, essential for economic empowerment.
• SACCOs educate their members on financial matters by teaching prudent handling of money, how to keep track of finances, how to budget and why to keep away from hire purchases and loan sharks.
• SACCOs pay dividends on shares to their members once the SACCO is established and profitable. Members therefore take pride in owning their own SACCO.
• SACCOs do not raise equity from outside interests. All money lent to members is money mobilised by members. Because it’s members funds, members are committed to paying back their loans.
• Loans are insured. Upon the death of a member the estate will not have to repay any loans outstanding to the SACCO.
• SACCOs perform a critical and unique function as financial intermediaries. They mobilise significant volumes of personal savings and channel them into small loans for productive and provident purposes at the community level.
• SACCOs are members of SACCOL who is also a direct affiliate to the World Council of Credit Unions (WOCCU).