If you ask your parents or a majority of older people in Kenya regarding investing, they’ll probably start by advising you to join a SACCO.

For a long time, Saccos have been a major investment vehicle for a majority of Kenyans given how they make it easy to access loans and other investments.

It’s no lie, SACCO loans are easily accessible compared to bank loans. Banks will require a host of documents that not all might provide before your loan is approved.

On the contrary, SACCOS will only require your contribution record or pay slip to get your loan approved. The great thing about SACCOS is that you can get a loan even if you’re not employed.

Banks interests rates have always been quite high compared to SACCOS too.

Saccos are quite popular here in Kenya. According to SASRA (Sacco Societies Regulatory Authority), there are about 200 registered and licensed Saccos in 2021. This means you have about 200 options when you’re shopping for one.

But millennials and Gen Z aren’t praising them as the older generation does.

This brings us to our topic, are SACCOs worth the time and effort?

Not really.

We are not saying they are not important. They are.

Younger people, however, are not interested in them so much because they have found new avenues where their money can work much harder and faster for them. The keywords here are FASTER and HARDER.

Millennials and Gen Z are living in a microwave generation where they want instant results. Saccos offer long-term investments which need years and a lot of patience to take off.

John Warui, the chief executive of Network Sacco explained it better when he said with Sacco it’s a slow process but it sure has its rewords.

“In a Sacco, you make your cake and eat it,” says Warui.

“By being a member of a Sacco, you are a shareholder. You earn a dividend as an owner and interest on deposits as a shareholder. In a bank, your savings are used to make profits for the bank but you get nothing from that.”

Such long term investments are now being replaced by newer ones that offer better returns eg: Money Markets, Stock Markets and Cryptocurrency.

Another thing that younger people hate with Saccos is that once your money has gone into your Sacco, there are only two ways to get it out: you either take a loan or you exit the Sacco altogether.

Borrowing your own money is one of the ironies of a Sacco that the younger generation doesn’t understand. You borrow your own money and you use that money to guarantee yourself.

Leaving the Sacco is another stressful affair that can take almost a year if not longer. And before you leave, everyone you guaranteed a loan should have also cleared their loan balances.

In short, you become their slave once you join.

Again, you pay for other people’s sins; if someone you guaranteed a loan fails to clear in time, you end up paying for them.

With how indisciplined millennials have become financially, this is actually one of the biggest reasons why the same generation isn’t running to SACCOs as much.

A huge number, however, embrace Saccos because of their relatively lower interest rates and ease of credit access as compared to commercial banks. Banks offer 14% interest rates on loans while Saccos offer a fixed deposit savings rate of between 5% – 8% and the loan rate is 12-13% per annum.

The internet has changed the investment game, introducing new options that our parents didn’t have. One thing the younger generation now understands is that doing things in a certain way just because it has been done that way for years doesn’t count.

This generation is about exploring and always trying to figure out how to lift the heaviest stones with the least effort.

29 Replies to “Why joining A Sacco Doesn’t Excite The Younger Generation Anymore”

  1. Good Afternoon George,

    In your articles at Market Cap, I suggest you print the name of the article writer.
    My suggestion though

  2. Investment in a SACCO is not only long term as indicated in the article. It is both long term and short term: Short term in the sense that dividends and interest on deposits are paid annually; and long term in the sense that the deposits are refunded upon withdrawal ( which is relatively long term).
    Also the issue that in a SACi, you borrow your own money is misleading. The fact is that you can borrow up to five times your deposits. So I’d you have deposits of Sh. 500,000, you can borrow up to Sh.2 million provided you have the ability to pay.
    As a shareholder in a SACCO, you participate in the decision making process, which is very crucial because any decision taken has your input. This may not be the case in banks.
    SACCOs also educate members ( borrowers) including in matters of personal financial management, investment, among others. In other words, they want you not only to repay their loan, but to ensure that the loan improves your financial position ( and hence increases the borrower’s wealth) while banks are only interested in you paying the loan.

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