Which is the best Sacco to join?

Best sacco to join in Kenya

Saccos also known as co-operatives, were established in Kenya with the objective of pooling resources together so that members can lend money among themselves to conduct projects that can help them become financially stable.

There are of two types ;

FOSA –Front Office Service Activities also known as deposit taking. They are licensed by SASRA, which is a regulatory authority that oversees Sacco operations.

BOSA-Back Office Service Activities. All co-operatives are licensed by the ministry of co-operatives.

Both SASRA and the Ministry of co-operatives provide a framework that guides the operation of Saccos to ensure that your money is safe. You can rest assured that your investments are safe and are not being mismanaged.


There are several reasons why co-operatives are quite popular in Kenya. Some of the benefits of joining one are;

Low Loan interest rates

If you compare loans from Saccos and banks, you will notice that their interest rates are much lower than those of banks. Furthermore, their loans are calculated on reducing balance basis while banks loans are calculated at a flat rate. These two variables make the loans very cheap.

Members act as loan security

In co-operatives, members’ guarantee each other loans. You do not need to have collateral such as a title deed for you to be granted a loan.

Investment Vehicles

Members earn dividend on their shares and interest on their deposits at the end of each financial year.

For a Sacco to pay dividends and interests, SASRA demands that an AGM is conducted where members go through the co-operatives’ financial statements for the year and then pass a resolution to issue out the prescribed dividends and interests.

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There is a common misconception among Kenyans that shares and deposits are the same and you’ll find many people using the two terms interchangeably.

Below are the key differences between the two;

Difference between shares and deposits

Deposits can be withdrawn while Shares cannot.

When you buy shares, you typically purchase a stake in the Sacco .

Just like in the stock exchange market, you have to find a willing buyer whom you can sell the shares to. If you cease to be a member,you can transfer your shares to an existing member but cannot withdraw them.

For deposits, the money that you contribute is used as a baseline and a multiplier to give you a loan and you can withdraw them when you decide to terminate your membership.

Deposits earn interests while Shares earn dividends

Another difference is that shares earn you dividends while deposits earn you interests .The dividend rate is usually higher, compared to the deposits interest rate mainly because shares take into account the performance of the whole sacco while interest rates is calculated on member deposits only.

How to know which Sacco to join

There are key elements that you need to take into account when identifying which one to join;

  1. If it is a deposit taking co-operative, confirm that it is regulated by SASRA.
  2. Confirm that it is registered by the ministry of co-operatives.
  3. Check what interest rate on member’s deposits they declared in the last financial year.
  4. Check what rate of dividend they declared in the last financial year.
  5. Confirm you have relatives or friends in therein that can act as your guarantors when you take a loan.
  6. Check if there is a high rate of withdrawal from membership. You can easily identify this from the previous financial statements by checking whether the withdrawable deposits have increased or decreased. This is normally found in the liabilities section.
  7. Compare their loan interest rates with other Saccos. Most co-operatives offer loans at an interest rate of 12 % pa which translates to 1 % per month on reducing balance.
  8. Check their credit policy. For example, if you are a farmer it is prudent you join a farmer’s co-operative as you can pay your loan from the farm produce.
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Best Saccos in Kenya

We did this by analyzing the rate at which dividends and interest were declared in the year 2020 as this will show the overall performance of the co-operative.

Below are our findings;

SaccoDividend rate 2020Interest rate 2020
Ushuru 9%
Hazina 20%10.3%
Kenya Bankers 10%6%
Mwalimu  9.3%
Gusii Mwalimu13%12%
Cosmopolitan 15%11.8%
Kenya Police 17%10.5%
Tower 20%13%
Nyati 21%11.25%

From the table above we see that Nyati offered the highest dividend in the year 2020 at a rate of 21% while Tower offered the highest interest rate on deposits.

How to calculate dividends in a Sacco

For you to calculate dividend in a co-operative, gather the following information;

  • The number of shares and deposits that you hold by the end of a financial year.
  • The total amount of member shares and deposits in a by the end of a financial year.
  • The total amount of profit to be shared as dividends among the members.

There are two ways you can calculate dividends;

  • Flat rate basis
  • Prorata basis

How to calculate dividends using flat rate basis

It is easy to calculate dividends using the flat rate method.

Just take the shares you hold as a member, divide it by the total number of shares then multiply the total amount to be issued as dividends.

I.e. dividends= (individual member shares/total number of member shares) x Amount of profit to be shared as dividends.

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For example, if you have shares of Ksh 10,000/= by the end of financial year and the total number of sacco shares is Ksh 10,000,000, while the dividend that has been proposed to be issued is Ksh 2,000,000, below is what you will get as dividends;

(10,000/10,000,000) x 2,000,000 =2,000/= . You will be entitled to a dividend of 2,000/=

How to calculate dividends using pro rata basis

This is a complicated method that ensures that dividends are allocated in equal proportion based on the period  when the member remitted their shares and deposits.

For example; opening balance on the first day of the year  earns  a full year’s interest. i.e. 12 months. January’s contribution earns an interest of 11 months, February’s 10 months and so on.  December contribution earns no interest.

This method seeks to encourage members to save early in the year so as to receive more dividends.

Let’s assume the dividend that has been declared is 20% ,your contribution at  the start of the year is 80,000/= and your monthly contribution is 5,000/=, below is the dividend you will get at the end of the year.

MonthMonthly contributionDividend rateMonth in the YearDividend earned
Previous year’s contribution80,00020%12/1216,000

The dividend that you will earn at the end of year is Ksh 21,498.30


There are many other Sacco’s that we haven’t  captured in the table above.

If you are interested in knowing what dividend was issued in the  year 2020 for a particular co-operative, leave a comment below.

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