SACCO: Benefits, How They Work and the Impact of Digitization

Sarah is from Kenya. Sarah has limited means and has no major savings or assets. She is a small vegetable vendor and interested in small savings but scared to keep all her savings at home due to the security reason of losing all her savings when she is away from home. Sarah has a dream to grow her business and wants to make it large but does not have enough required savings.

However, she is a little too intimidated by banks. Sarah doesn’t satisfy all the requirements and doesn’t have all the required documents that banks ask for to give her a loan.

Additionally, the interest rates on loans at the bank are too high and stressful for Sarah.. Sarah also doesn’t want to go to money lenders, because she doesn’t trust them.

Sarah hears something about SACCO from her friend Elizabeth and decides to visit a SACCO. When Sarah visits the nearest SACCO, Nicholas, the manager at SACCO explains to her about the SACCO and its functioning as below:

What is SACCO?

A SACCO (Savings And Credit Cooperative Organisation) is a member-based financial service institution. It is a self-help organisation by way of which groups of people pool in their savings and provide loans to these very members.

Savings groups are an especially important alternative for the vast number of women who are unlikely to be served by financial institutions due to the lack of a savings culture and needed documents that banks ask for.

SACCOs help people to cultivate a savings habit and investment culture and allow them to borrow a loan as per their needs. The aggregated savings in a SACCO group are used to give out loans to its members. These loans may be working capital loans, for any purposes like weddings, children’s education, house renovation, health or any personal or emergency need.

How does a traditional SACCO work?

SACCO groups are structured to prevent just one person from having access to group funds. These groups store money in a box protected by three locks. The group’s treasurer keeps the box and there are three additional key holders. These four individuals only come together with the box and keys during group meetings and group funds can only be accessed during those times.

Difference between a SACCO and a Bank. Which is a better loan?

Banks are for-profit making financial institutions owned by people or private investors and governed by a board of directors chosen by the shareholders.

SACCOs are non-profit financial cooperatives owned by their members and governed by a board of directors elected by, and from among, those members.

The real interest rate of a SACCO loan in Africa is even lower than 12%, compared to bank loans which can easily be double the rate.

How has technology given a traditional SACCO a digital touch?

With all the successes and benefits of savings groups and mobile phone technology, combining the two creates the potential to improve each.

The mobile product has been designed to replicate the traditional SACCO system. Keeping the traditional concept as is, digital technology touch is given to a SACCO functioning, which can be accessed from low or No internet zones & also from a low-end mobile handset to help the rural population.

The group wallet involves one individual who holds the group SIM, and three additional mobile users and PIN holders who are like the key holders. These three people will be notified when the SIM-keeper initiates a cash-in or cash-out transaction. The SIM Keeper can request a transaction, but all three must approve it before cash can be withdrawn. These individuals will receive a text message with an identification number indicating they need to approve the transaction before any money is moved. The rest of the group members are treated as notification recipients who receive the notification on their mobile when an activity is done in the group. The service will incorporate the following tools:

  • Group accounts: a group wallet to support the safe storage of group funds as mobile money.
  • Record management (mini statement): Regular mobile reports can be generated to summarize transactions during that period.
  • Mobile banking: The Group Savings product can be linked to bank accounts at financial institutions to allow access to interest-bearing savings and credit. Credit will be dependent on saving history, and instalments can be paid from the group wallet.

SACCO Statistics:

SACCOs are popular in African countries like Kenya, Uganda, South Africa, and Malawi. Around 14 million Kenyans belong to SACCOs, which have more than S732 billion in deposits and S1 trillion in assets. In the 2016 FinAccess survey conducted in Kenya, 66.4% of adults use savings/deposit instruments. This includes MFIs, SACCOs and bank accounts. 48.7% said they need to save for day-to-day expenses. The most common sources of formal credit were found to be SACCO loans and mobile bank account loans. The same survey also showed that SACCOs are among the most trusted financial service providers. Interestingly, mobile financial services are also highly trusted as a channel for financial services. Some of the top SACCOs in Kenya & Uganda are:
  • Kenya Police SACCO, Kenya
  • Unaitas SACCO, Kenya
  • Usalama SACCO, Uganda
  • Stima SACCO, Kenya
  • Waumini SACCO, Kenya
  • K-Unity SACCO, Kenya
  • Tower SACCO, Kenya
  • Safaricon SACCO, Kenya

About Kenya Police SACCO, Kenya:

Kenya Police SACCO of Kenya was founded in 1972 by the staff who worked in Kenya Police. Their headquarters are based in Nairobi’s Ngara area & its membership has grown to 52,000. It was initially meant for members of the police service, but the SACCO has now open for all.

They offer their members a loan of up to 3 times an individual’s savings with a repayment period of 48 to 72 months. The interest rate charged on loans is a remarkable 13.5% on reducing balance. Kenya Police SACCO is best known for excellent, quality service.

Profinch solution for digitizing the SACCO model:

This is where Profinch’s FinFlowz platform can help to digitize and transform lives. FinFlowz platform can integrate with SACCO’s & provide a solution to digitize the traditional SACCO model and give them the digital dimension.

All SACCO members can have a digital wallet and are mapped to a group SACCO digital wallet. Members can deposit to the SACCO’s digital group wallet. Even SACCO members can request for a loan digitally and approval can be done digitally without any paperwork. Once the loan is approved, it can also be disbursed via mobile money transfer. Similarly, members can repay loans through mobile payments.


Conclusively, SACCOs have currently played a major part in African society. They have grown beyond imagination, and they are helping the world grow economically one day at a time. Every day, SACCOs increase in number, and this ensures that countries grow every day. A digital touch to traditional SACCO functioning is helping it to spread its wings in all directions adding robust security.