How SACCOS generate employment in Africa

Every year, Africa faces a significant challenge as 10 to 12 million youth enter the workforce, yet only 3.1 million jobs are created. This disparity leaves a substantial number of young people unemployed, leading to various socio-economic issues, including substandard living conditions, increased migration, and stunted economic growth. Consequently, a vast majority of Africans, particularly youth and women, find themselves working in the informal sector, which is estimated to employ nearly 80% of the population in many African countries.
The pressing need for job creation to foster inclusive economic growth in Africa is evident. Cooperative societies, particularly Savings and Credit Cooperative Organizations (SACCOS) in countries like Kenya, Tanzania, Uganda, and Ethiopia, have emerged as significant employers within the informal economy. These cooperatives play a crucial role in employment generation by providing direct jobs and promoting self-employment, with some estimates indicating that they offer around 80% of non-government employment in certain regions.
How SACCOS Generate Employment
Direct Employment
SACCOS and other cooperatives provide direct wage employment to individuals working within these organizations. They also promote a culture of savings among their employees, which serves as collateral for larger loans. This savings culture encourages further investment and economic opportunities for savers. The impact of SACCOS on employment is particularly noticeable in the self-employment sector.
Self-Employment Opportunities
SACCOS significantly promote self-employment by offering quick and affordable business loans to their members. These loans enable individuals to start new businesses, rebuild after losses or natural disasters, and access both short- and long-term credit facilities to meet their needs. In addition to financial support, SACCOS create marketing opportunities and raise profit margins by negotiating better rates for their members. For example, many farmers in Kenya use their SACCOS to sell products like coffee and milk, thereby improving their income and economic stability.
Supporting Business Ventures
SACCOS also indirectly generate employment for non-members through the business ventures they support. The businesses that receive support from SACCOS often create job opportunities for non-members across various industries. For instance, Kenyan business owners in sectors such as packaging, stationery, and warehousing derive their income from supporting the operations of SACCOS and their members.