Sacco, often referred to as SACCO, is an acronym for Savings and Credit Cooperative Organization. It is a financial institution that operates on a cooperative basis, specifically designed to provide members with a variety of financial services.
A SACCO functions similarly to a traditional bank in terms of offering savings and credit services, but with some key differences. SACCOs are primarily established with the aim of encouraging thrift among members and providing them with affordable access to credit facilities. They operate under the cooperative principles of autonomy, democratic control, member participation, and mutual assistance.
Members of a SACCO contribute regular savings, which are then pooled together to create a collective fund that is subsequently used to provide loans to members. The interest earned from these loans and other investments forms the financial base for the SACCO and is shared among the members in the form of dividends or increased savings interest rates.
SACCOS are often community-based organizations, restricted to members living or working in a specific locality or employed by a specific organization. They offer various financial products and services, such as savings accounts, fixed deposit accounts, personal loans, education loans, mortgages, and even insurance products.
The primary objective of a SACCO is to foster a culture of savings, promote financial inclusion, and provide convenient and affordable financial services to its members. SACCOs play a vital role in enhancing financial stability and promoting economic growth, especially in underserved communities where access to formal financial institutions may be limited.
