Many people think they cannot go wrong by joining a Savings Credit Cooperative Organization (Sacco), but recent scandals warn you to be cautious. Many people have lost their hard earned cash through Saccos managed by unscrupulous people. We tell you how to know a legit Sacco from a fake one…
The media has been abuzz with stories of log saccos that have conned people of their savings. This is not a trend in Kenya but neither should it deter you from saving in a Sacco, if you wish to.
To begin with Saccos are great initiatives that have seen many people save money and access loans at cheaper interest rates to pursue their dreams and goals such as building a house, starting or expanding a business. But considering the number of upcoming Saccos there is need for one to do their due diligence. Some of the things you should pay attention to include:
Certification and validity: Before you settle on the Sacco of your choice, confirm that it is registered under the Sacco Societies Regulatory Authority (SASRA). This is the basic requirement any Sacco worth its salt ought to have. SASRA is a government agency with
key responsibilities of licensing and supervising Sacco’s operations in Kenya.
While at it, ensure the Sacco has a thriving membership and operates ethically. Many people today aspire for ‘get-rich-quick schemes’ but it is prudent that one avoids organisations that promise insane end of months returns on investment, as they are likely to be a rip off.
Do your homework to establish how long has the Sacco existed, its kind of operations, its mission and vision, and its achievements so far.
Sacco’s physical location: Whereas it is a fact that many companies today have embraced online businesses and even used the company’s social media platforms to advertise their products, it is equally important for you to trace their physical location as well so that incase of any problems or unanswered questions, you can walk into their offices and have a face-to-face meeting.
Management systems: The management team is the driving force in any institution and plays a big role in determining the company’s success. Directors are key in the management of any institution and possibly the biggest determinants of whether your cash is safe or not. It is therefore worth finding out if the managers are qualified to be steering the company.
On the same note be on the lookout for values upheld by the management such as integrity. Dig out more information about the companies these managers have worked at or managed before, and find out if they have any record of being involved in corruption syndicates.
Guarantor requirements: This can be a big headache for you as the aim of joining a Sacco is to save and access loans at low interest rates. You will therefore need to join a Sacco with at least five people you know well so that you can guarantee each other when in need of a loan.
Remember, to be a guarantor is a huge risk because incase of default the guarantor bears the debt burden. The Sacco seizes the guarantor’s savings deposits until the debt is cleared and if it is not you can end up losing your savings.
Rules and regulations: Each Sacco has guidelines which one follows such as when you want to join or exit from the Sacco. Familiarise yourself with the terms and conditions of being a member and how you can qualify for a loan.
Also learn other rules and conditions such the interest rate earned on dividends, the acceptable securities for a loan and even the kind of loans they offer, among others. Take your time before joining a Sacco and do your ground work so that you don’t risk losing your cash to a rogue Sacco.