March 13, 2023   by

Financial Inclusion by SACCOs has proved to be successful as a result of their vital role in providing financial services to low-income earners and marginalized groups.

Savings and Credit Cooperatives (SACCOS) are member-owned financial institutions that offer savings and credit services to their members. The community-based organizations are designed to promote financial inclusion, particularly in rural areas where access to formal financial services is limited.

In the case of financial inclusion, it refers to the availability and accessibility of affordable and appropriate financial services to all individuals and businesses, including those who are traditionally excluded from the formal financial system.

SACCOs in Kenya have played a significant role in promoting financial inclusion, particularly among low-income individuals and SMEs. 

In Kenya, SACCOs have a long history dating back to the 1950s. Today, there are over 15,000 SACCOs in Kenya with a membership of more than 14 million people. SACCOs have become a vital source of credit for small and medium-sized enterprises (SMEs), which are the backbone of the Kenyan economy.

 According to a report by the World Bank, Kenya has one of the highest rates of financial inclusion in Africa, with 82% of the adult population having access to some form of financial services. SACCOs have contributed significantly to this success story.

How SACCOs have served to ensure financial inclusion.

One of the primary reasons why SACCOs are crucial in promoting financial inclusion is their ability to provide affordable credit to their members. Most SACCOs offer loans at lower interest rates compared to commercial banks, making it possible for low-income earners to access credit. This, in turn, helps to boost their economic activities and improve their living standards. SACCOs also tailor flexible repayment terms to meet the needs of their members.

Another way in which SACCOs promote financial inclusion is through their savings products. SACCOs encourage their members to save regularly and use these savings to provide loans to other members. SACCOs design a range of savings products to meet the needs of different members. For example, SACCOs could offer:

  • Savings plans allow members to save for specific purposes such as education, health, or emergencies.
  • Savings accounts that earn interest.

SACCOs also play a critical role in promoting financial literacy and education. They offer financial training and education to their members, which helps to improve their understanding of financial concepts and their ability to manage their finances effectively. This, in turn, helps to promote financial inclusion by encouraging members to save and invest their money wisely. SACCOs also offer business development services to their members, such as training on how to start and manage a business, which helps to improve their entrepreneurial skills and increase their chances of success.

Additional SACCO benefits.

In addition to promoting financial inclusion, SACCOs also have several other benefits. For example, they provide a safe place for members to save their money, which is particularly important in areas where formal financial institutions are scarce or not trusted. Members own and manage SACCOs, which gives them a sense of ownership and control over their financial affairs. This, in turn, helps to promote financial empowerment and independence.

SACCOs also help to promote social and economic development in the communities they serve. By providing credit and savings services, they help to stimulate economic activity and promote entrepreneurship. This, in turn, creates jobs and boosts local economies. SACCOs also promote social cohesion by bringing together members of a community to work towards a common goal.

Role of SACCOs in financial inclusion and Kenya’s economy.

For Small and Medium Enterprises(SMEs), Savings and Credit cooperative Organizations, 

 SACCOs have become a critical source of credit. As is currently in Kenya, SMEs are the backbone of the Kenyan economy. According to the Kenya Union of Saving and Credit Cooperatives, the SACCOs have lent over  600 billion to their members with SMEs accounting for a significant portion of loans.

As a result of their main focus on the underserved, SACCOs have therefore been greatly successful in promoting financial inclusion. This is majorly brought about by the fact that in most instances, they focus on low-income individuals and communities that are often excluded from traditional banking services as they strive to serve them, what has majorly brought about the success has been attributed to their major focus to understand the needs and challenges of their members thus providing customized financial solutions to meet their unique needs.

In another instance, the success of the SACCOs in Kenya is their use of technology. As a result of the adoption of mobile banking, it has therefore been possible to reach more members especially those in rural areas. Mobile banking has also enabled the SACCOs to offer more services to their members, such as mobile money transfers, and thus members can easily access their accounts and apply for loans. The digital platforms also come in handy in the provision of financial education to the members, thus enabling them to make informed financial decisions.

Measures were undertaken by the government to promote the success of SACCOs.

The government, in support of the initiative, has played a crucial role in promoting the growth and success of SACCOs in Kenya.

Some of the measures undertaken include:

  • Provision of tax incentives to the SACCOs. This has been of great advantage as it has encouraged the growth of SACCOs by greatly reducing their financial burden. It is therefore possible for the SACCOs to provide affordable financial services to their members. 
  • Establishment of a regulatory framework. This is essential in ensuring the sound management and operation of SACCOs.
  • Provision of funding to the SACCOs. This is through programs such as Youth Enterprise Development Fund serves to promote the growth of SMEs.

Innovation in financial services by SACCOs.

SACCOs have also been at the forefront of innovation in financial services in Kenya.

They have therefore managed to develop innovative products and services to meet the evolving needs of their members. As a result of the large member following, the interaction brings about the collection of numerous ideas thus the SACCOs strive to keep up with the market requirements of their members.

One of these innovations has been the introduction of micro-insurance products. This serves to protect their members from unforeseen events such as illness or death. In order to offer more comprehensive financial services, SACCOs have partnered with financial institutions such as banks and insurance companies.

 Challenges faced by SACCOS as they strive to ensure financial inclusion.

The success of SACCOs in promoting financial inclusion in Kenya is not without its challenges. 

One of the main challenges is the lack of regulatory frameworks in some countries. This, therefore, makes it difficult to monitor and regulate the activities of SACCOs, which can lead to fraud and other forms of misconduct.

The lack of proper capacity building has also been a challenge. This, therefore, is a risk factor in terms of the sustainability of the SACCOs.

Another main challenge has been the lack of awareness among potential members about the benefits of joining a SACCO. SMEs and individuals lack knowledge on how they can benefit from the SACCOs, especially with regard to the financial services offered. SACCOs need to invest in marketing and awareness campaigns to educate potential members about the benefits of joining a SACCO.

Also, the lack of capacity in terms of human resources and infrastructure has been another challenge facing the SACCOSs. The outdated technology and limited staff, limit their ability to provide quality financial services to their members. SACCOs, therefore, need to invest in training their staff and upgrading their technology to improve the quality of their services.

The technical solution for SACCOs.

Chamasoft has brought about a perfect digital solution for SACCOs, that is, WebSacco.

The platform, WebSacco, serves to ensure that a digital lending business or microfinance runs a profitable and digitally aware enterprise.

Through the digital solution, SACCOs get member tools that enable saving, borrowing, and loan repayments through their mobile phones.

The major advantage the solution brings about is that it is easy to setup, safe, and secure and also has dedicated support for the members.


In conclusion, the role of SACCOs in promoting financial inclusion cannot be overstated. They play a vital role in providing affordable credit and savings services to low-income earners and marginalized groups. They are also key in promoting financial literacy and education. In addition., they provide a safe place for members to save and promote social and economic development in the communities.

Therefore, as Kenya continues to grow and develop, it is without a doubt that SACCOs will remain an essential part of the country’s financial landscape.

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This post was written by Cynthia Njoki

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