SACCO Deposits vs Shares: Understanding the Difference

Savings and Credit Cooperative Societies (SACCOs) remain a key pillar of financial inclusion in Kenya and across the world. For millions of members, SACCOs provide an affordable way to save, access credit, and build financial security. However, one area that often causes confusion is the difference between SACCO deposits and SACCO shares. While both are important components of membership, they serve different purposes and carry different rights and benefits.

This article explains the distinction between SACCO deposits and shares, their role in a member’s financial journey, and why understanding them is crucial for maximizing SACCO benefits.

Table of Contents

What Are SACCO Shares?

When a member joins a SACCO, they are usually required to buy a minimum number of shares. These shares represent ownership in the cooperative. Just like in a company, SACCO shares give members part ownership and a right to participate in decision-making through voting at the Annual General Meeting (AGM).

Purpose: To show ownership and provide capital for the SACCO.
Dividend Earnings: Members earn annual dividends on shares, based on the SACCO’s performance.
Non-withdrawable: Shares cannot be withdrawn during membership, though they can be transferred or refunded if a member exits the SACCO.
Voting Rights: The number of shares determines a member’s eligibility to vote and influence policy in the SACCO.

For example, if a SACCO requires each member to hold at least 200 shares worth Sh100 each, a new member must pay Sh20,000 as share capital to become part of the society.

What Are SACCO Deposits?

Deposits are the regular savings that members contribute to the SACCO, usually every month. Unlike shares, deposits are not ownership but savings that accumulate over time and can be refunded when one exits the SACCO.

Purpose: To build a savings pool that SACCOs use for lending.
Interest Earnings: Members earn annual interest on deposits, usually higher than commercial banks offer.
Loan Security: Deposits are often used as collateral for loans. For example, many SACCOs allow borrowing up to three times the value of a member’s deposits.
Refundable: Deposits can be withdrawn if a member leaves the SACCO, subject to the by-laws.

If a member saves Sh5,000 monthly as deposits, after two years they will have accumulated Sh120,000. This can qualify them for a loan of up to Sh360,000, depending on the SACCO’s loan multiplier.

Differences Between Shares and Deposits

Ownership vs Savings: Shares represent ownership in the SACCO, while deposits are savings contributions.
Refundability: Shares are non-withdrawable while still a member, but deposits can be refunded upon exit.
Earnings: Shares earn dividends, while deposits earn interest.
Use in Loans: Deposits are used to secure loans, while shares are not typically considered collateral.
Minimum Requirement: Members must buy a fixed minimum number of shares, but deposits are ongoing contributions.

Both deposits and shares are essential for SACCO membership. Shares ensure that members have a stake in the SACCO’s governance, while deposits provide liquidity and security for lending. Together, they strengthen the SACCO’s financial base and enhance a member’s ability to access affordable credit.

Understanding this distinction helps members make better decisions on saving, borrowing, and participating in SACCO activities.