Why Kenyans are choosing Saccos over traditional banks

Human beings and not just Kenyans have a knack of being drawn towards convenience. And that explains the reason why many Kenyans are choosing to borrow from Saccos over the traditional banks. Without further ado, here are five reasons why many borrowers choose Saccos over traditional banks, especially when it comes to personal loans:

Saccos charge lower interest rates

Saccos are formed to cater to the members. Banks, on the other hand, are built to create profit. Therefore, most Kenyans are attracted to Saccos because they offer much lower interest rates than banks. For instance, a Sacco created by farmers for farmers will not only understand the struggles that the farmer goes through but will offer interest rates that will not make him or her strain.

Despite never being too straight forward about it, most traditional banks only care about their profit margin. That’s plain and simple. The latter explains why their interest rates are almost always much higher than Saccos. Even when the traditional banks tend to lower their interest rates (for the sake of attracting more customers), they never do so by a more significant margin.

The availability of dividends

It’s no secret that most traditional banks don’t offer its members dividends at all. It’s almost as though giving their customers dividends will take a chunk from their precious profit margins, something they wouldn’t dare even if their lives depended on it. Just like it’s the case with convenience, most humans want to feel appreciated. 

Unfortunately for banks, giving dividends happens to be one of the many ways of making customers feel wanted and, most importantly, appreciated. The best thing most traditional banks can do is sending you an appreciation text for Christmas, wishing you another year of prosperity so they can get more of your money.

Saccos, on the other hand, will stop at nothing to make their members feel appreciated. Whether the Sacco made a loss or profit, the members always expect their dividends. Needless to add, they do arrive in their mailboxes on time. These dividends are a specific date every year, which makes it safe to budget for the cash since they never disappoint.

The loan process is easy-breezy 

Another precious reason why many prefer Saccos over traditional banks is because of the loaning process. Unlike conventional banks, most Saccos have a secure method to follow. Some require a formal request, and that’s all. In addition to the straightforward process, you can always count on the loaning processing to be as fast as possible. And as if the latter isn’t impressive enough, even unemployed members can still secure a loan from their Saccos.

When it comes to requesting a loan from your regular bank, you can always expect a long and tedious process was going to kill you. That’s if the long, dismissive gazes from the cashier won’t get you first. You will also be expected to be employed because, well, the bank has to be sure that their investment is secure. On top of that, the bank will need your payslip, proof of employment, and many other documents before they can think of giving you a loan. Note that any red flag, even the most insignificant one, might lead to the bank denying you the loan.

Additional benefits

As if the dividends are impressive enough, you can always count on your Sacco, giving you additional benefits. One such way is through the acquisition of assets on behalf of their members. Many Saccos have been known to venture into real estate, or general business, all in the name of giving their esteemed members a chance at financial stability. Besides venturing into real estate and starting businesses on behalf of their members, some Saccos have bought large tracks of land. 

They’ll then have it divvied it into small parcels before selling it to their members at a much lower price. The members can then use the land as they deem fit. Nonmembers can also buy the land from the Saccos but not as cheaply as the members would. Traditional banks have never done this, not even for their esteemed employees. It’s no wonder most, if not all, bank employees are members of Saccos on the side.

Guarantors are easy to secure in Saccos. 

In most cases, members of a Sacco usually have the same interests. For instance, teachers of an area can come together and form their own Sacco. That way, whenever you want to borrow, finding a guarantor becomes as easy as giving a close friend a phone call, and everything checks out in a matter of minutes. I can’t say the same when it comes to banks because it serves Kenyans from different walks of life.

Fixed loaning rates

Unlike Saccos, traditional banks are affected by variables such as inflation and economic growth. And as such, it becomes a tad challenging to maintain fixed loaning rates, which makes it quite risky for anyone seeking to acquire a loan from them. The last thing you want is getting a loan at a 15% interest rate only to wake up the next morning and find it at 30%. Such volatility can’t be tamed because such variables are always out of the banks’ control. 

And since their ultimate goal is to make maximum profit, it becomes quite challenging to include the customer when doing so will dent your profit margins. Thankfully, Saccos only exist for the benefit of the members, and that’s all that matters. So, whether the economy is doing great or not, you can always count on the interest rates remaining fixed. The latter is crucial because it will go a long way in helping you plan for the future without any uncertainty.

The environment 

As hinted earlier, Saccos consists of people who’ve come together with a common interest. Therefore, the officials responsible for lending money to other Sacco members understand where your situation. Instead of asking you annoying questions, they’ll take your word for it process your loan pronto. More often than not, you may engage in some friendly banter as your application is processed.

Unfortunately, friendly banter is the last thing you’ll expect to come across in the banking hall. First of all, there’s a big chance that the cashier seating juxtapose doesn’t know you. And as some Kenyans say, a Kenyan that doesn’t know you is a Kenyan that doesn’t care about you. So, for them, to rubberstamp that dreaded “DENY” on your application wouldn’t deny him or her an ounce of sleep. And that’s why most Kenyans prefer Saccos over banks.

A final word

It’s no secret that banks are not only aware of the massive exodus and are doing all they can to counter it. One of the many ways that banks have retaliated was Stawi, a lender-friendly initiative that was launched by President Uhuru Kenyatta himself a few days ago. Stawi initiative will not only offer Kenyans lower interest rates but will also ensure that the process of securing a loan is made less tedious.

It’s only a matter of time before Saccos give their answer to the stawi initiative, which will be quite interesting to see. Unfortunately, the stawi initiative only covers businesses, leaving out individuals who also need soft loans from time to time. Either way, when the Saccos and banks and fighting to win Kenyans, one thing that they have now realized is the fact that Kenyans won’t just sit around and continue suffering substantial interest rates. 

Their loyalties will always switch to the lending institution that cares to tick off all the traits mentioned above. And for now, Saccos seem to be doing just that. That said, the next couple of months should be attractive as far as the lending landscape in this country is concerned.