Are SACCOs evolving?

Savings and credit cooperatives, commonly known as SACCOs, have been on a journey of evolution over the past decade. Initially perceived as institutions catering to a specific segment of the population, SACCOs have now garnered widespread acceptance amongst the middle class in various African countries. CNBC Africa spoke with Andrew Mbuya, the Group Managing Director at ONFON Group, to delve into the transformative changes taking place within SACCOs. Mbuya highlighted the pivotal role SACCOs play in fostering financial inclusivity and how they have become a vital component of the financial sector, especially in Kenya and other African nations. One of the key themes that emerged from the interview was the shifting perception of SACCOs from being exclusive to the lower class to now attracting members from the corporate class. Mbuya attributed this change to the accessibility and flexibility offered by SACCOs, particularly in contrast to traditional banking institutions. SACCOs provide a platform for individuals to pool their resources, access capital, and obtain financial products without the stringent collateral requirements imposed by banks. The interview also touched upon the limitations of traditional banking models in sub-Saharan Africa, where the majority of the population faces challenges in accessing credit due to low employment rates and inadequate income levels. Mbuya pointed out that the banking industry often caters to a select group of people, leaving a significant portion of the population underserved. This disparity has paved the way for SACCOs to fill the gap and provide financial services to a broader demographic. Furthermore, Mbuya highlighted the competitive advantage of SACCOs in offering unsecured lending, which sets them apart from traditional banks. By allowing members to become direct stakeholders in the cooperative, SACCOs create a sense of ownership and shared benefits that are not typically found in traditional banking models. This unique feature positions SACCOs as a sustainable and community-oriented alternative to mainstream banks. In essence, SACCOs represent a new era of financial inclusion in Africa, where cooperative principles and mutual support drive economic empowerment. As SACCOs continue to evolve and expand their reach, they are poised to play a crucial role in bridging the gap between financial services and underserved populations. With their inclusive approach and member-focused strategies, SACCOs are redefining the financial landscape in Africa and paving the way for a more equitable and accessible financial system.