Savings and Credit Cooperative Societies (SACCOs) provide some of the cheapest loans in Kenya, but increasing numbers of members are quitting.
According to findings from the 2024 FinAccess SACCO Sub-Sector Report, this is caused by affordability pressures, strict savings rules, and poor service, which outweigh the benefits of low interest rates.
The report shows that over half of Kenyans who quit SACCO services did so voluntarily, while 46.2 percent cited affordability issues as the main reason for leaving.
Kenyans Gradually Abandon SACCOs
The situation occurs even as the SACCO sector reports solid financial growth, with regulated SACCO assets climbing to Ksh1.08 trillion by December 2024 and membership rising to 7.39 million.
Affordability emerged as the single biggest barrier to SACCO use, cited by 54.5 percent of non‑users.
Women were hit harder than men, with 57.4 percent of women saying SACCO services were too expensive, compared with 51.3 percent of men.
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Older adults aged 46 to 55 recorded the highest affordability constraints, while for young people aged 18 to 25, eligibility requirements were the dominant obstacle.
Despite their image as low-cost lenders, SACCOs require fixed monthly savings contributions, fees, and penalties that many households struggling with rising living costs cannot afford.
Casual workers and dependents, whose incomes are irregular or unreliable, are therefore the most affected.
Only 5.8 percent of casual workers accessed SACCO services in 2024, compared with 33.7 percent of formally employed Kenyans.
The data shows that while SACCO access increased slightly to 11.7 percent in 2024 from 9.6 percent in 2021, participation among dependents fell sharply from 23.2 percent in 2021 to 12.1 percent in 2024.
The proportion of SACCO members borrowing decreased from 41.9 percent in 2019 to 34.7 percent in 2024, even as the median loan amount increased from KSh60,000 to KSh100,000 during the same period.
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The average loan rose to Ksh316,538 in 2024, showing that fewer members are borrowing, but those who do are taking significantly larger loans.
SACCO Credit Tilts Toward Urban Members
Urban members receive median loans of Ksh150,000, nearly double the Ksh80,000 accessed by rural borrowers.
According to the report, men receive median loans of Ksh130,000 compared with Ksh80,000 for women, exposing gender and location disparities within a system built on collective ownership.
Guarantors remain key to SACCO lending, accounting for 53.5 percent of loan collateral in 2024, up from 42.8 percent in 2019.
While this model maintains a low default rate of 1.15 percent, it also exposes members to potential financial losses when borrowers default, which has discouraged some from staying in SACCOs.
Customer service challenges are worsening the problem of the increasing number of people leaving SACCOs, as poor service was cited more often in rural areas. At the same time, unexpected charges, system downtime, and internal fraud are prominent concerns among consumers.
About 75.1 percent of respondents who lost money said the losses were due to internal fraud within SACCOs, raising questions about governance even as digital usage grows.
Digital adoption is speeding up, with mobile access increasing from 19.1 percent in 2021 to 55 percent in 2024.
However, loan repayments are still primarily made through salary deductions, which account for 59.7 percent of repayments, while mobile repayments account for only 6.8 percent, limiting flexibility for informal earners.
The report concludes that although SACCOs are financially healthier and more digitally connected, their traditional structure still favors salaried workers with stable incomes.
For millions of Kenyans living month to month, cheaper loans are no longer enough to keep them inside the SACCO system.
