What is a SACCO?

SACCO is the acronym for Savings And Credit Co-operative. There is no difference between a credit union and a SACCO. The term “credit union” is generally not used in Africa and specifically in South Africa to avoid confusion with the various labour movements. However some habits die-hard.

A Savings and Credit Co-operative (SACCO) is a democratic, unique member driven, self-help co-operative. It is owned, governed and managed by its members who have the same common bond: working for the same employer, belonging to the same church, labour union, social fraternity or living/working in the same community. A Savings and Credit Co-operative’s membership is open to all who belong to the group, regardless of race, religion, colour, creed, and gender or job status. These members agree to save their money together in the SACCO and to make loans to each other at reasonable rates of interest. Interest is charged on loans, to cover the interest cost on savings and the cost of administration. There is no payment or profit to outside interest or internal owners. The members are the owners and the members decide how their money will be used for the benefit of each other.

Savings and Credit Co-operatives are democratic organisations and decisions are made in a structured democratic way. Members elect a board that in turn employ staff to carry out the day-to-day activities of the SACCO. The number of board members are between nine and fifteen. Members also elect a supervisory committee to perform the function of an internal audit.

A SACCO is not

  • A stokvel or burial society, but they can join a SACCO as a club or as individuals.
  • A bank, that will turn away ordinary people as “bad credit risks”.
  • A subsidiary, franchise or branch of a company or financial services loan scheme, which does not really benefit anyone.
  • A “loan shark”, exploiting people.