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How Ethiopia inspired the Sacco movement in Kenya

By Amos Kareithi | August 10th 2021

Mìnister for Co-Operative Development Maina Wanjigi breaking the ground for the construction of a three-storey banking building in Nairobi in 1987.

It was a season of unrest. Peasant farmers and labourers were rioting. Their hard-earned savings were drying faster than droplets of rain on their farmlands.

It was tough being a peasant in Kenya in the 1980s. Banks were exclusively for the elites as they demanded princely sums to open a savings account, backed up by reputable account holders as references.

When the cooperative societies started to collapse, hundreds were dissolved while their assets worth billions were auctioned. Many were put under liquidation. It is against this background that the freshly appointed Commissioner of Cooperatives, Erastus Kihara Mureithi tasked to reorganise the sector in August 1984, in a bid to regain the confidence of the remaining co-operative societies and their members.

The minister of Co-operative Development at the time, Maina Wanjigi also demanded a simple name that would resonate with the common man. He felt that the name co-operative society was too long and mouthy for the users.

The search for an acceptable name and winning savings and credit cooperative societies model took Mureithi and his team to various countries around the world before they settled for a solution not too far away from home.

When the commissioner toured South Africa and Ethiopia, he discovered that members of co-operative societies had formed deposit-taking entities known as savings and credit co-operative societies limited shortened as SACCOL. When Mureithi borrowed his term knocked off letter L and presented the name SACCO to his minister. Wanjigi was ecstatic.

36 years later, Sacco has become a code name for accessible credit for the erstwhile forgotten lot. So pervasive is this saving vehicle that some entities have even evolved into full-fledged banks.

Although the madness which gripped co-operative and credit societies in the 1980s has been tamed, there have been instances where members have lost their investments to rogue SACCOs and lenders.

By the end of 2019, a tenth of the population or 4.78 million people were members of SACCOs out of which 60.5 per cent were men. From the ruins of yesteryear, the sector has grown to 174 deposit-taking Saccos which loaned a total of Sh419 billion. Stringent rules governing the industry and regular supervision have also safeguarded the assets currently estimated at Sh556.7 billion.

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