Land, school fees, agriculture: How Kenyans spent Ksh.460 billion Sacco loans

This was revealed in the Sacco Supervision Annual Report, 2023, released by the SACCO Societies Regulatory Authority (SASRA), that highlighted the performance of Saccos across eight sectors; manufacturing and servicing, education, human health, land and housing sectors.

Others include agricultural, trade, finance and investments and consumption and social services sector. 

From the total amount, Kenyans spent Ksh.124.185 billion to purchase land and build residential houses. This accounted for the biggest chunk (26.97 per cent) of the total loans distributed by Saccos.

This was, however, a decline from a previous share of 33.24 per cent of the funds distributed to the land sector in 2022. 

The education sector took the second biggest proportion, amounting to Ksh.96.33 billion representing 20.92 per cent of the loans distributed. Parents spent these funds mainly to pay school fees and other expenses related to education. 

In contrast, this also represented a slight decline of 21.98 per cent of funds distributed to education in 2022. 

Farmers were also not left behind as they borrowed loans amounting to Ksh.78 billion, accounting for 16.96 per cent of the total funds disbursed. 

This represented an increase from 13.76 per cent disbursed in 2022, showing the rise in farmers' lending activities in Saccos. Farmers also form the bulk of Saccos membership at 42 per cent. 

Similar gains were also noted in the trade sector as Kenyans took Ksh.58.19 billion, indicating a 12.64 per cent of the disbursements in 2023. This represented an incline from 10.85 per cent in 2022. 

"SACCOs are cooperative enterprises and are therefore by design and legal framework socioeconomic business vehicles," the report read in part. 

"As such they are expected to fund consumption and social activities or ventures of their members, such as payment of utilities, consumer durables and social or communal expenses."

Kenyans' interest in Saccos have piqued in the recent past especially in loan applications due to quick access to the loan facilities and fixed rates on interest rates. 

In the case of banks, the fluctuation of the Central Bank Rate by the Central Bank of Kenya depending on the current market often signals higher interest rates on customer loans. 

As of December 31, 2023, 176 Saccos had been licensed for deposit taking while another 183 were licensed for non-deposit operations. 

Deposit taking saccos act similar to commercial banks as they require customers to open a savings account and deposit money whereby they can easily withdraw. 

On the other hand, non-deposit saccos requires one to purchase shares and become a member by saving their money. The caveat is one cannot withdraw the funds unless they plan to leave the sacco.