Difference between shares and savings in SACCOs

In the realm of saving and investing with Savings and Credit Cooperatives (SACCOs), individuals encounter two fundamental terms: “shares” and “savings.” While both are integral to one’s financial journey, it’s imperative to grasp the differences between the two.
What is Shares in a SACCO?
Shares in a SACCO symbolize ownership in the cooperative society. By acquiring shares, individuals become partial owners and gain influence in the SACCO’s decision-making processes. The price of a share typically remains fixed, with each member mandated to procure a specific number of shares. While shares cannot be utilized as loan collateral, they accrue dividends and afford certain privileges and entitlements within the SACCO.
What is Savings in a SACCO?
Conversely, savings within a SACCO encompass the routine contributions made by members to their individual accounts. These savings gradually accumulate over time and earn periodic interest. Savings constitute a crucial aspect of fortifying one’s financial security and can be withdrawn or pledged as loan collateral within the SACCO. Various savings plans with diverse interest rates and terms are offered by the SACCO, enabling members to select options aligned with their needs and financial objectives.
Difference between shares and savings in SACCOs
The primary disparity between shares and savings resides in their purpose and functionality within a SACCO. Shares denote ownership and furnish members with specific entitlements, such as voting privileges in the Annual General Meeting or participation in representative elections. In contrast, savings serve as a means to amass funds and generate interest over time. They are accessible for withdrawals and can be utilized to accomplish personal financial objectives or as security for loans.
Shares and savings synergistically support the overall operation of the SACCO. While shares embody ownership stakes, savings contribute to the fund pool available for member lending. The amalgamation of members’ shares and savings enables the SACCO to furnish affordable loan facilities and additional financial services.
Comprehending the discrepancy between shares and savings empowers individuals to make informed financial decisions. Shares confer ownership and decision-making authority, whereas savings facilitate fund accumulation and interest generation over time. By leveraging both shares and savings, members can optimize the advantages of SACCO membership and strive towards attaining both short-term and long-term financial objectives.