How members can maximize dividend benefits in SACCOs

For millions of Kenyans, Savings and Credit Cooperative Organizations (SACCOs) remain one of the most reliable ways to save, access affordable credit, and earn dividends. While many members focus on borrowing, experts say dividend benefits can be significantly increased through informed and active participation.

Dividends are not automatic or fixed. They depend on both the SACCO’s performance and the behaviour of individual members. Understanding how dividends work — and what influences them — is key to getting the best returns.

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How SACCO Dividends Are Earned

Dividends are paid from a SACCO’s surplus at the end of a financial year. This surplus comes mainly from:

Interest earned on loans
Income from investments
Fees and other SACCO activities

After meeting operating costs and setting aside reserves, the remaining surplus is shared among members — usually based on share capital, savings, and sometimes loan usage.

Members who understand this structure are better placed to position themselves for higher payouts.

Increase Share Capital Consistently

One of the most effective ways to earn higher dividends is by building up share capital.

Dividends are often calculated as a percentage of share capital.
Members with higher shares receive higher dividend payouts.
Unlike savings, share capital is usually non-withdrawable and reflects long-term commitment.

Experts advise members to gradually increase shares whenever possible, rather than relying on minimum requirements.

Save Regularly and Grow Deposits

Although not all SACCOs pay dividends on deposits, many reward members through:

Interest on savings
Enhanced borrowing power
Higher loan rebates

Regular saving increases a SACCO’s lending capacity, which boosts overall income and surplus. Members with consistent savings records are also viewed favourably when dividends and rebates are being considered.

Borrow Responsibly and Repay on Time

Loan activity plays a major role in SACCO profitability. Members who borrow responsibly help the SACCO earn interest, which feeds into the dividend pool.

To maximize benefits:

Borrow only what you can repay comfortably
Avoid defaults and delays
Clear loans within agreed timelines

Some SACCOs offer interest rebates or patronage refunds to members who borrow and repay loans faithfully, further increasing overall returns.

Avoid Loan Defaults and Penalties

Loan defaults reduce SACCO income and increase operational risks. This can lead to:

Lower dividends
Increased penalties
Tighter lending rules

Members who default indirectly reduce their own dividend potential and that of other members. Staying disciplined protects both individual and collective benefits.

Participate Actively in SACCO Governance

Many members miss out on dividend-related decisions because they do not attend Annual General Meetings (AGMs).

AGMs are important because members:

Approve dividend rates
Decide how much surplus is shared or retained
Elect leaders who influence SACCO performance

Active participation ensures transparency and allows members to push for fair dividend policies.

Choose a Well-Managed SACCO

Not all SACCOs perform equally. Members should regularly review:

Past dividend history
Audit reports
Loan performance and default rates
Management efficiency

A SACCO with strong governance, low operating costs, and sound investments is more likely to deliver consistent dividends.

Diversify Your SACCO Benefits

Members can increase overall returns by combining:

Share dividends
Savings interest
Loan rebates
Access to affordable credit

Viewing SACCO membership as a long-term financial partnership — rather than just a loan facility — leads to better outcomes.

Be Patient and Think Long-Term

Dividends grow over time. Members who stay committed, increase shares gradually, and maintain good financial discipline often see the biggest rewards.

Short-term withdrawals, irregular savings, and frequent defaults weaken dividend potential.