A Savings and Credit Cooperative Organization (SACCO) is a financial and credit support organization owned, managed, and directed by its members who have an interest and purpose. Big corporations from different sectors are investing in SACCOs as they have been proved to be attractive in terms of regulations and financial benefits. For individuals it is a very effective way of saving and a way to access quick and cheap means of raising capital furthermore, the SACCO as an entity has power that comes from having members and regular income from contributions.
Types of SACCOs
In Kenya, SACCOs are divided into two segments: deposit-taking and non-deposit taking. Both segments mobilize savings deposits from members, which are used as collateral for purposes of advancing loans to members.
a. Non-deposit taking SACCO
A non-deposit SACCO is described as a society that mobilizes savings from its members in the form of membership subscriptions. These savings are strictly utilized as collateral for credit facilities advanced to such members. These deposits are not withdraw-able by the member but can only be refunded when the member leaves the SACCO. The non-deposit taking SACCOs do not offer front office services as members do not hold accounts where they deposit or withdraw money.
b. Deposit taking SACCO
A deposit taking SACCO is one that takes deposit, and thus offers withdraw-able savings accounts services similar to those offered by banks. These SACCOs also offer front office services where members can walk into their banking halls as they withdraw or deposit money into their accounts. Deposit taking SACCOs are licensed and regulated by SASRA (Sacco Societies Regulatory Authority). Besides the basic saving and credit products they also provide basic banking services that is; they demand deposits, provide payment services and some even provide ATMs.
Requirements for SACCO registration in Kenya
Here are the requirements if you intend to register and operate a SACCO in Kenya.
- If you intend to take deposits from your members, you will be required to obtain a license from SASRA but non-deposit taking SACCOs are exempt from SASRA registration.
- The numbers of members at registration are dependent on the sector:
- 50 members of an agricultural society.
- 20 for Savings and Credit Cooperative Society.
- 10 members for other types of Cooperatives.
- Members are required to be above 15 years of age; while board members must be 18 years of age and above.
- A certified copy of the SACCO society’s bylaws. A three-year business plan together with a feasibility study of the SACCO society in order to be licensed with the detailed vision, mission, scope, and nature of the business operations, the projected profitability in order to achieve the set standards, monitoring procedures, and the control measures.
- A certified extract of the minutes after a general meeting resolution authorizing the licensing of the SACCO by the members. A name of the newly elected Chief Executive Officer. List of certified copies of the financial statements for the past three years, where applicable.
- Evidence that the SACCO has adequate capital to run. In case you are wondering how much it cost to register the SACCO, well you have to pay an application fee of Ksh 3,000.
- Formulate a formal request in a letter prescribing the need for the formation of the SACCO.
- Provide the names of the members for search and approval.
- Formulate the objectives of society.
- Provide the multitude of members that would be in the SACCO.
- Propose the names, occupational standards, and home and postal addresses of the chairman, secretary, and treasurer that form part of the committee.
- Formulate the proposed physical address of the society. The address also includes the road, plot number, town, and county.
- You are also required to formulate the SACCO’s constitution.
SACCO registration in Kenya
a. Non-deposit taking SACCO
To register a non-deposit taking SACCO in Kenya, follow this procedure.
- Submit a formal request in writing to the Commissioner for Cooperative Development with intent for the formation of a non-deposit taking SACCO. With the following documents:
- Proposed names for search and approval.
- Objectives of the society.
- The number of members in the society (at least 10 members).
- The name, occupation and postal addresses of the chairman, treasurer and secretary.
- Proposed physical address of the society, address includes road, plot number, town and county.
- Constitution of the society.
- SACCO registration forms.
- An application fee of Ksh 3,000.
- Upon provision of the above documents, the Cooperative Officer shall convene a meeting within a week with the proposed members. Usually, the quorum should be at least ten (10) members. In the meeting, there will be the appointment of interim officers with the main idea of oversight the process. Other requirements for the registration shall be communicated at this point.
- Upon approval of the name and registration, the SACCO is required to convene the first general meeting with a month after receipt of the certificate.
- The process of registration lasts about two months.
b. Deposit taking SACCO
To register a deposit taking SACCO in Kenya, follow this procedure.
- Propose a SACCO name that will be approved by Cooperative Society Department subject to availability.
- Upon approval of the name, a SACCO registration form will need to be completed with details of all the board members and members including proof of identity documents as well as physical address of all members. The SACCO will be required to have at least twenty (20) members.
- A member must be at least fifteen (15) years of age.
- Board members should be eighteen (18) years of age.
- Every member must have a common need with other members of the society.
- A member must be in an occupation relevant to the primary society.
- A member must be capable of paying fees and buying shares.
- All directors and senior management will be subject to a fit and proper test vetting their moral and professional suitability to be on the board and to manage the SACCO respectively.
- You must pay a registration fee of Ksh 500 to register your SACCO.
- Once the registration is complete, you will submit a license application form to SASRA alongside your SACCO registration documents for review. Here are the documents you must submit:
- Completed application for a license.
- A certified copy of the SACCO’s registration certificate.
- A verified official notification of the SACCO‘s registered head office.
- A certified copy of the SACCO’s bylaws.
- A three-year business plan and feasibility study of the SACCO to be licensed detailing the vision and mission, scope and nature of business operations, projected profitability to achieve the minimum prudential standards, control measures and monitoring procedures.
- A certified extract of minutes of the general meeting resolution authorizing the application for the deposit-taking license.
- The name of the proposed Chief Executive Officer.
- Certified copies of financial statements for the preceding three years, where applicable.
- Evidence that the SACCO has adequate capital. Provide a minimum core capital of Ksh10 million as shown in financial or through submission of bank statements.
- An application fee of Ksh 3,000.
- If satisfied, SASRA will issue a letter of intent, upon which SACCO will be required to develop its business premises, set up a management information system (MIS) and develop a comprehensive framework risk management.
- Once all the above are done, SASRA will conduct an on-site inspection within 30 days.
- If satisfied, SASRA will issue a letter of acceptance to the SACCO within 30 days.
- SASRA will also authorize upon payment of a SACCO license fee of Ksh 50,000 for head office and Ksh 20,000 for each branch owned.
- It takes an average of 4 months for SASRA to issue a license. The license to operate the deposit taking SACCO will be renewed annually (valid up to the 31st December, of the year in which it is issued).
- The SACCO shall at all times maintain:
- Core capital of not less than Ksh 10 million.
- Core capital of not less than 10% of total assets.
- The institutional capital of not less than 8% of total assets.
- Core capital of not less than 8% of total.
