SACCOs have long been a trusted way for many people to save, access credit, and grow wealth collectively. The dividend is often one of the most visible measures of success, and it’s tempting to choose a SACCO promising high payouts. But as John Mwangi, CEO of Tai SACCO Society Ltd, explained at Abojani’s 4th Economic Empowerment Conference, high dividends can be misleading. A SACCO that pays out more than it earns may look attractive in the short term, but over time, this can weaken its financial foundation and leave members exposed when they need loans or support the most.
This is why due diligence is crucial. Before joining, it’s important to understand how the SACCO operates, starting with the basics. What is the minimum share capital required to become a member, and what does that commitment mean for your finances? How consistent are past dividends, and do they reflect real profits or one-off decisions? Knowing the interest rates on deposits and the lending capacity of the SACCO helps you evaluate how your money will work for you and what access to credit looks like when you need it.
Loan terms are equally important. Understanding what collateral or guarantees are required ensures you are not exposed to unexpected obligations. Membership fees should also be reasonable, reflecting the value you receive without unnecessarily reducing your returns. Beyond the numbers, it’s essential to consider reputation, governance, and service quality. How transparent is the SACCO? Are policies, by-laws, and regulations clearly communicated and consistently applied? A strong, experienced management team often signals stability and accountability, and that matters for long-term wealth building.
At its core, joining a SACCO is not just about chasing the highest short-term dividend. A well-managed SACCO can provide access to loans, encourage disciplined saving, and create opportunities for wealth accumulation in ways that are reliable and safe. Members who take the time to evaluate financial health, governance, and services position themselves to benefit for years to come.
High dividends may catch the eye, but the real measure of a SACCO’s strength is in its transparency, financial stability, and member-centered practices. Asking the right questions and understanding how a SACCO operates is an important step in protecting your money and building lasting financial security.
