How long does it take to receive SACCO dividends?

Dividends are one of the key benefits of being a member of a Savings and Credit Cooperative Society (SACCO). They are a share of the SACCO’s annual profits distributed to members based on the amount of shares they hold. However, many members often ask: “How long does it take to receive SACCO dividends?” The answer depends on several factors, including the SACCO’s policies, financial year, regulatory requirements, and operational efficiency.

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- Tips for Members to Receive Dividends Faster
  - Author: Andrew Walyaula
Timing Depends on the SACCO’s Financial Year

Most SACCOs operate on a financial year basis, which may align with the calendar year (January to December) or a different period defined in their bylaws. Dividends are usually calculated after the financial year ends, once all accounts are audited and profits determined. This means that even if a SACCO has performed well, members won’t receive dividends immediately until the financial statements are finalized.

Audit and Approval Process

Before dividends are paid, SACCOs must conduct a comprehensive audit of their accounts to ensure accurate reporting of profits. The audited financial statements are then presented to the board of directors and the general meeting of members for approval. This process can take several weeks to a few months, depending on the size of the SACCO and the complexity of its operations.

Regulatory Compliance

In Kenya, SACCOs regulated by the Sacco Societies Regulatory Authority (SASRA) must adhere to statutory requirements before declaring dividends. This includes ensuring that the SACCO has maintained adequate reserves, liquidity, and capital adequacy, and that the dividend payout does not compromise the SACCO’s financial stability. Compliance checks may delay payments, especially for large SACCOs with thousands of members.

Dividend Payment Methods

The speed of receiving dividends can also depend on the payment method:

Bank transfer: Dividends sent directly to members’ bank accounts are usually faster, taking a few days after approval.
Check issuance: If the SACCO issues dividend checks, members may need to wait longer due to processing and delivery time.
Reinvestment in shares: Some SACCOs allow dividends to be reinvested automatically, increasing members’ shareholding instead of receiving cash.

Internal Policies and Communication

Each SACCO sets its own dividend declaration policy. Some SACCOs pay dividends within one to three months after the financial year ends, while others may take up to six months. The efficiency of internal operations, including payroll, banking arrangements, and member communication, can also influence how quickly dividends are received.

Factors That Can Cause Delays

Several factors can delay dividend payments:

Incomplete membership records: Missing or outdated bank account information can hold up payments.
Pending audits or disputes: If there are discrepancies in accounts or member complaints, dividends may be withheld until resolved.
Financial performance issues: SACCOs may postpone dividend payments if profits are lower than expected or if reserves need to be strengthened.

Tips for Members to Receive Dividends Faster

Ensure your shareholding and bank account details are up-to-date with the SACCO.
Attend annual general meetings to stay informed about dividend timelines.
Understand the SACCO’s financial year and dividend declaration policy.
Engage with the SACCO’s management or board if payments are delayed.