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

1. 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+.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

• Having proper by-laws, transparency, and record-keeping from the start strengthens trust and smooth operations.

• 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.