SACCO vs Chama: Expert Explains Key Differences and Benefits for Kenyans

Young people looking for ways to save money and grow their income often consider joining Savings and Credit Co-operative Societies (SACCOs) or chamas. However, the two savings groups have different structures, benefits and ways of operating.According to Nicholas Kamonye, the Managing Director and Chief Executive Officer of Co-op Consultancy, a subsidiary of the Co-operative Bank Group, SACCOs offer a more structured way of saving money, accessing affordable loans and building wealth collectively. Speaking during the Co-op Youth Forums on Friday, November 13, he described chamas as informal groups, while SACCOs operate under formal management and ownership structures.

Kamonye explained that registered cooperatives operate as separate legal entities from their members. This means they can own property, enter into contracts, sue and be sued. SACCOs must also meet registration and regulatory requirements before conducting their operations. Those offering regulated deposit-taking services must obtain licences from the Sacco Societies Regulatory Authority (SASRA).

Another major difference is governance. SACCO members participate in decision-making through annual general meetings, where they elect leaders, review financial reports and discuss important issues. Members are also owners of the SACCO through their share contributions and enjoy equal voting rights regardless of the number of shares they hold.

Kamonye also explained that SACCOs allow members to combine their savings and create larger financial resources. For example, if 100 members contribute KSh1,000 every month, they can raise KSh1.2 million in one year. He noted that such collective savings can support bigger financial investments than individual contributions.

Additionally, SACCOs provide members with access to loans after meeting certain savings and membership requirements. Depending on the institution, members can borrow three to four times their accumulated deposits, subject to their income and repayment ability. Some SACCOs charge interest rates of approximately 1% per month, making them an alternative source of financing for businesses, property purchases, and personal needs.

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