SACCOs (Savings and Credit Cooperative Societies) that are licensed to engage in deposit-taking business have been warned about declaring Dividends and Rebates from non-existent surpluses.
This warning from the Cabinet Secretary for Cooperatives and MSMEs Development Wycliffe Oparanya comes as the dividends season for SACCOs, which began in January rolls out, with the calendar expected to end in April this year.
Available data shows that most SACCOs that have already held their Annual General Meetings(AGMs) have been declaring double digit returns, rates that are now the envy of players in the financial and capital markets.
At the recently held 11th Annual Leaders Convention of the Kenya Union of Savings and Credit Cooperatives(KUSCCO) in Mombasa, Wycliffe Oparanya, Cabinet Secretary for Co-operatives and MSMEs, raised a firm but necessary warning: Some SACCOs are attempting to declare interest on deposits and dividends without sufficient revenues or real cash flows to support those payouts.
SACCOs are Declaring Double Digit Returns to Members
The list of SACCOs that have already declared dividends to members for the 2025 financial year include Tower SACCO- Dividends on share capital: 20% and Interest/Rebates on Savings: 13%, Cosmopolitan DT SACCO- Dividends on Share Capital: 16.50% and Interest/Rebates on Deposits: 12.05%; Univision SACCO- Dividends on Share capital: 14.6% and Interest/Rebates on Deposits: 12%, Newfortis SACCO- Dividends on share capital: 14% and Interest/Rebates on Deposits: 13%; Yetu SACCO with Dividends: 19% and Interest/Rebates on Deposits: 13% and Ports DT SACCO- Dividends: 20% and Rebates (Interest on Deposits) at 12.5%.
Analysts observe that when SACCO declare returns without genuine earnings behind them, what is being created is not surplus — it is illusion. And illusion in finance eventually meets reality.
Out of 69 SACCOs recently subjected to regulatory review, Sacco Societies Regulatory Authority (SASRA) says only 19 successfully completed the process. This statistic alone reveals the depth of compliance gaps within the SACCO sector.
Several institutions, despite receiving internal board approvals to pay interest and dividends, were rejected by regulators. Why? Because prudential standards were not met — inadequate capital buffers, weak liquidity positions, and unverified surplus levels.
When a SACCO declares what we call “non-existent surpluses,” it weakens liquidity and quietly increases systemic risk. Today it looks like strong returns. Tomorrow it becomes delayed withdrawals, frozen accounts, or worse.
Regulators have now moved to tighten discipline — restricting honoraria payments and curb discretionary expenditures. These are not punitive measures. They are stabilizing ones.
But while SASRA is warning against SACCO Directors who borrow from banks to pay dividends, the dilemma remains that these societies are private member only , meaning directors enjoy immense borrowing powers and security of tenure, based on the clout and immense shareholding that some of the board members possess.
There are Board Directors in some rural-based farmer cooperative societies, whose election into the board is based on the number of coffee tress or size of their tea plantations, and not their level of education and leadership competences.
According to Dedan Maina, a certified financial analyst, returns must be earned — not engineered. For SACCO members, this is the moment to become financially conscious stakeholders, not passive contributors.
“At an AGM, members should take time and review audited financial statements, understand how your SACCO calculates dividends, ask about liquidity ratios and capital adequacy and demand transparency in surplus declarations,” said CFA Maina.
He said dividends are a reward for performance — not a marketing tool.
Kenya’s cooperative movement is one of the strongest pillars of grassroots wealth creation. The SACCO industry has undergone significant transformation and now competes on same level playing field with the rest of the financial sector players. While SACCOs now have huge balance sheets and deposits, they still have not access to the national payments system, cannot issue cheques or even participate directly in the diaspora remittances business.
Even with immense strides and reforms undertaken, experts warn that strength without governance becomes fragility. Sustainable growth is built on discipline, not optimism.
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