OPINION Winning and retaining members now needs such programs, because of increased competition for deposits in the Sacco sector gaining momentum. Due to the slowed deposit mobilization in the Sacco movement, the gap between gross loans and deposits, is currently hitting the highs of Kshs 39.11 billion, when compared to the previous Kshs 32.37 billion.
Kenya’s Saccos match during Ushirika day celebrations.
Saccos Must Adopt Initiatives to Attract and Retain High End Savers By Malachi Motano.
S
avings and Credit Cooperative Societies (SACCOS) and other financial institutions, should adopt measures, to counter the increasing competition, which presents flamboyant options, ultimately risking losing big savers. The Saccos, whether small, medium or large must now consider using different ways of motivation, to retain their current members, as well as improve their existing products and services, to generate more revenue. Some of the programmes Saccos have been embracing include, awarding the highest savers, utilizing reward schemes. Sacco leaders should look at the big savers in terms of shares and deposits, as well as those who take loans and pay back in time, as the people who patronize their Sacco products, hence deserving recognition. The recognition doesn’t have to be cash, but can also be in form of certificates and trophies or a retreat, like the one done recently by the Kenya Police Sacco. Appreciating member’s efforts, might hold them longer at the Sacco and also motivate others to
join. Saccos can also come up with programmes, like loyalty dividends, with members who have saved in the Sacco for long, as well as those who regularly make use of the Sacco’s services as the beneficiaries. There are Saccos, that have been paying dividends, that range from seven to ten per cent over the years, but have currently developed special payout, known as loyalty dividends, that enables members who qualify, to earn an additional three per cent. The programme will reward those who save, take and service more loans as they qualify for the dividend, since Saccos rely mostly on deposits. The loyalty dividend is crucial, since it assists in making more members remain hooked to the Sacco’s products, instead of just saving, while waiting for the normal dividend, at the end of the year. Members’ uptake of products and services, is the main source of money for the Sacco, hence members should be encouraged to patronize them, therefore deserving rewards. The concern to introduce recognition schemes, comes at a time when Saccos are recording low growth in deposits, the slowest in seven years, with an increasing appetite for loans due to the economic hardships that members have been facing, amid the Covid-19 pandemic. According to current statistics by the Sacco Society Regulatory Authority (SASRA), last year deposits grew by 11.27% to Kshs 380.44 billion, from Kshs 341.91 billion, while the growth rate in 2018, was at 11.99%, which marked the fifth straight year, of slowing pace in mobilization of deposits which is a key resource for lending. Still on recognition, all Saccos should encourage a saving culture and utilize it as a promotional tool.
The regulator is now warning that unless Saccos mobilize enough deposits, they risk external borrowing. The situation is undesirable, since Saccos have to fund the deficit from external sources, which in most cases turns out to be expensive. Although Saccos have not been so competitive in the past, the emergence of many microcredit organisations, exposes them to new competitors. Previously, Saccos paid little attention to membership drive. Appreciation of good savers might improve membership. Other measures to help Saccos attract and retain membership, is by having their members sharing their success stories so that others can emulate, like the way Safaricom Sacco in 2019 revealed that their highest saver, had hit Kshs 20 million and encouraged others to take the cue. Incorporating loyalty schemes, discourages members from taking loans with other financial institutions. If a society has high liquidity, and members are not borrowing, the excess funds can only yield meagre returns, therefore Saccos must reverse the trend, because as members increase their deposits, without a commensurate increase in loans, they dilute rebates in equal measure. Its encouraging that few Saccos like Qwetu, Boresha, Imarika, Unaitas and Kenya Highlands among others are developing such programmes.
OCTOBER - NOVEMBER 2020 | SACCO TIMES
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