The Sacco Societies Regulatory Authority (SASRA) has issued a warning to SACCO members and management, cautioning that high dividend payments may come at the expense of their future savings. In an advisory, SASRA questioned whether members are being rewarded today at the cost of their future security. The regulator emphasized that a SACCO's strength should not be measured solely by its annual payouts.
SASRA argued that a SACCO's financial health should be evaluated based on its capacity to safeguard deposits, offer affordable credit, and remain financially stable. The regulator urged SACCOs to strike a balance between rewarding members and retaining enough resources to sustain their operations. This advisory does not announce a blanket ban on high dividend payments but encourages members to take a more active interest in their SACCO's financial performance.
Members were urged to use annual general meetings to question management on financial performance, dividend decisions, loan recovery, deposit levels, and long-term sustainability. SASRA asked them to establish whether their SACCOs are strengthening their financial position or drawing down resources that could support future growth. This move aims to promote transparency and accountability within the SACCO sector.
Dividend payments remain a central consideration for many Kenyans choosing where to save through cooperative societies. Annual payouts provide an additional source of income for some members, who use the money for household expenses, reinvestment, or other investments. However, the regulator's message raises questions about the relationship between generous payouts and the ability of SACCOs to maintain sufficient capital.
SASRA concluded that a financially healthy SACCO should be judged by its ability to grow, protect members' savings, and provide affordable loans, rather than the size of its annual dividend payout. The regulator's advisory aims to promote a more comprehensive understanding of SACCO performance, beyond just dividend payments. This approach is expected to contribute to the long-term sustainability of SACCOs.
Co-operatives and Micro, Small and Medium Enterprises Cabinet Secretary Wycliffe Oparanya recently spoke during the launch of the SACCO Supervision Annual Report 2025. The report likely highlights the regulator's efforts to promote transparency and accountability within the SACCO sector. The Cabinet Secretary's involvement underscores the government's commitment to supporting the growth and stability of SACCOs.
The regulator's warning is likely to have implications for SACCOs and their members. By promoting a more nuanced understanding of SACCO performance, SASRA aims to protect members' savings and promote the long-term sustainability of these cooperative societies. Members are encouraged to take an active interest in their SACCO's financial performance and make informed decisions about their savings.
Key points
- SASRA warns SACCO members that high dividends may compromise future savings.
