How to Start a SACCO in Kenya
Introduction
Starting a Savings and Credit Cooperative Organisation (SACCO) can help your community build savings, access affordable loans, and gain financial stability. The law in Kenya provides a clear process for registering, licensing, and operating a SACCO. Below are the steps, requirements, risks, and tips you need to follow so your SACCO is legal, sustainable, and credible.
Step by Step Guide
Gather founding members
Find at least 10 people who share a common bond (profession, locality, church, group).
Ensure they meet minimum age requirements—members typically must be 15+, board members 18+.
Choose and reserve a unique name
Conduct a name search at the Commissioner for Cooperatives to check if the proposed SACCO name is available.
Once approved, formally reserve the name.
Draft the constitution and by-laws
Prepare rules that guide how the SACCO will be governed (membership, shares, loans, meetings, dispute resolution).
Have the founding members review and approve these documents in a founding meeting.
Register the SACCO society
Submit completed forms, approved by-laws, list of members with IDs, minutes of formation meeting, and proof of address to the Co-operatives Department under the Ministry of Co-operatives and MSMEs.
Pay the required registration fee.
Obtain license if deposit-taking
If you intend for members to deposit funds (i.e. offer savings), you must apply for a license from the Sacco Societies Regulatory Authority (SASRA).
Submit documents such as audited financial statements, feasibility study or business plan, fit and proper documentation for board members and senior management.
Set up operations
Open a bank account.
Establish internal policies (loan policy, savings policy, credit risk, HR).
Recruit or elect a board and staff.
Train members and leadership on SACCO operations.
Begin member contributions and share capital
Collect share capital from members. The sum depends on your SACCO’s rules.
Determine regular contributions (monthly savings).
Member contributions serve as collateral for loans within the SACCO.
Maintain compliance and reporting
Submit regular financial reports to SASRA if deposit‐taking.
Ensure audits are done, bylaws adhered to, meetings held, and records kept.
Important Notes & Tips
Deposit‐taking SACCOs require higher capital, stricter oversight and more regulatory compliance.
Non‐deposit-taking SACCOs have fewer regulatory hurdles but cannot offer full savings and withdrawals like deposit‐taking ones.
Select board members who are trustworthy, competent, and able to commit to fiduciary responsibilities.
Do a feasibility study or business plan to assess risks, operating costs, income from interest and fees, member growth, etc.
FAQs
Q: What is the minimum number of members to start a SACCO?
You need at least ten founding members to register.
Q: Do I always need a license from SASRA?
Only if your SACCO will accept member deposits (i.e. you are deposit-taking). If not, you may operate under cooperative registration only.
Q: Can members pay share capital in instalments?
Yes. Many SACCOs allow members to pay their share capital gradually.
Q: What happens if a SACCO fails to comply with regulations?
It risks penalties, loss of license, or legal action. Regulatory bodies like SASRA or the Cooperatives Department enforce compliance.
Q: How long does registration and licensing take?
It varies, but registration might take several weeks; licensing for deposit-taking SACCOs may take several months depending on completeness of documents and regulatory review.
