Features & Sacco Leadership

Why SACCOS Mobilize Savings

Why SACCOS Mobilize Savings: How Does Saving in a SACCO Work?

Savings and Credit Co-operative Societies (SACCOS) are vital financial institutions that help individuals manage their money, provide access to credit, and contribute to economic development. Mobilizing savings is a central activity for SACCOS, and there are several compelling reasons why they focus on this task.

Why SACCOS Mobilize Savings

  1. Boost Shares at the SACCO

One primary reason SACCOS mobilize savings is to increase the number of shares held by members. Shares are a fundamental component of a SACCO’s financial structure, representing the member’s stake in the organization. When members save more, they can buy additional shares, thereby boosting the capital base of the SACCO.

  • Increased Financial Strength: A higher share capital enhances the SACCO’s financial stability, enabling it to undertake larger projects and provide more substantial loans.
  • Enhanced Member Engagement: When members invest more in shares, they become more engaged and invested in the SACCO’s success, leading to a more active and committed membership base.
  1. Boost Deposits at the BOSA

The Back Office Services Activity (BOSA) is a critical part of a SACCO’s operations, dealing with members’ savings deposits and loans. Mobilizing savings helps increase the total deposits at BOSA, which in turn strengthens the SACCO’s financial position.

  • Improved Liquidity: Higher deposits provide the SACCO with more liquid assets, which can be used to meet member withdrawal requests and provide new loans.
  • Greater Lending Capacity: With increased deposits, SACCOS can offer more loans to members, supporting their various financial needs such as business ventures, education, and personal expenses.
  1. Increase Interests at the End of the Year

SACCOS often distribute dividends or interest on the savings and shares of their members at the end of the year. By mobilizing more savings, SACCOS can generate higher returns and distribute better interest to their members.

  • Attractive Returns for Members: Higher savings allow the SACCO to achieve better financial performance, which can lead to increased interest rates or dividends for members, making saving with the SACCO more appealing.
  • Member Satisfaction and Retention: Offering competitive returns encourages members to continue saving and investing with the SACCO, leading to higher member satisfaction and retention.
  1. Improve SACCO Products

Mobilizing savings provides SACCOS with the necessary capital to enhance and expand their product offerings. These improvements are crucial for meeting the diverse needs of their members.

  1. a) Real Estate Loans
  • Home Ownership: By increasing their savings, SACCOS can offer more substantial and affordable real estate loans, helping members purchase or improve their homes.
  • Economic Development: Supporting home ownership contributes to local economic growth and community development.
  1. b) Business Loans
  • Entrepreneurial Support: SACCOS can provide loans for small businesses, helping members start or expand their ventures, which can lead to job creation and economic prosperity.
  • Business Growth: Access to capital can help businesses grow, innovate, and compete in the market, benefiting both the business owners and the broader economy.
  1. c) Agricultural Loans
  • Boosting Agriculture: By offering agricultural loans, SACCOS support members involved in farming and related activities, improving productivity and food security.
  • Sustainable Development: Financial support for agriculture promotes sustainable practices and enhances the livelihood of farmers.
  1. d) Other Loans and Services
  • Educational Loans: Members can access loans for educational purposes, improving their skills and career prospects.
  • Medical Loans: Medical loans help members cover healthcare expenses, ensuring better health and well-being.

 

Andrew Walyaula
Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

Andrew Walyaula

About Author

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

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