The importance of SACCOs in the Kenyan economy

Kenya has witnessed significant improvements in how people manage their savings and loans, largely due to the rise of Savings and Credit Cooperatives (SACCOs). These cooperatives have gained immense popularity, especially in rural areas, and have become instrumental in driving economic development, agricultural productivity, reducing unemployment, and eradicating poverty.
Historical Growth
The roots of SACCOs in Kenya date back to 1908. Since then, the movement has grown tremendously in terms of numbers, membership, and financial capacity. By 2017, there were over 22,000 registered SACCOs in Kenya, boasting more than fourteen million members. According to a report from the State’s Cooperative Department, SACCOs contribute over 30% of the country’s GDP, underscoring their immense popularity and economic impact.
Economic Development
SACCOs are established by members driven by the need for quick and affordable credit facilities. Members contribute a certain amount regularly, which is then pooled to provide loans to different members. This practice significantly enhances financial inclusion and deepens financial services among members, positively impacting their socio-economic development. Members can access loans for various needs, including business investments, purchasing equipment, and building houses, thus improving their financial stability and quality of life.
Agricultural and Non-Agricultural Productivity
SACCOs are recognized as highly effective in boosting both agricultural and non-agricultural productivity in Kenya. They facilitate the procurement, trade, and distribution of large volumes of farm inputs, aiding farmers in achieving higher productivity. Additionally, SACCOs support industrial development in rural areas by assisting in the marketing of agricultural and non-agricultural produce. Notable sectors benefiting from SACCOs include dairy and coffee.
Housing Solutions
SACCOs play a crucial role in the housing sector. A World Bank report revealed that 9 out of 10 housing units in Kenya are constructed with the help of SACCOs. Under Vision 2030, the Kenyan government envisions that SACCOs will provide 25% of the housing stock in urban areas. This highlights their vital contribution to addressing the housing needs of the population.
Modern Financial Solutions
Initially, SACCOs primarily offered savings and loan facilities. Over time, they have diversified their services to include agricultural support, investment opportunities, and housing solutions. This evolution has spurred overall socio-economic development among members, helping low-income groups access necessary financial services and alleviating poverty.
Role of Technology
Despite their significant contributions, SACCOs face challenges in meeting the rapidly growing financial needs of society. The need for affordable financial services continues to rise, and there is a pressing need for SACCOs to modernize their operations.
At Wakandi, we believe that digitizing SACCO operations can enhance their efficiency and service delivery, thereby increasing their importance in the Kenyan economy. With Wakandi’s platform, SACCOs can:
- Create a digital list of all members
- Store all documents digitally for KYC purposes
- Record savings and loans for each member
- Generate financial reports automatically
- Connect mobile wallets and bank accounts for digital transactions