challenges facing SACCOs

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The challenges facing SACCOs are numerous. They include regulatory issues, financial challenges, technological advancements, and changing customer needs.

In this article, we will discuss some of the challenges facing SACCOs and some potential solutions to these challenges.


Geo challenges

Most SACCO’s are based in one region without branches across the country. This makes it next to impossible for members outside the region to access the SACCOs and their services.

For instance, a SACCO that started as a farmers’ group in a particular town has grown in membership and revenues over the years. Some of the members decided to move to other parts of the country for their own reasons.

As a SACCO will it be economical to open branches across all the regions just to serve a few members?

If not, how will those members access their savings and your services?



Make use of alternative channels like mobile banking, agency banking, and even a members’ portal.

These solutions will help the SACCO to;

  • Increase revenues through members’ transactions
  • Offer SACCO members more convenient services
  • Makes members more active than before
  • Increase in membership due to the convenience offered
  • Reduce operational costs, ie opening and running physical branches

With other options like agency banking, you will be able to reach the unbanked populations. Get the unfair advantage and capitalize in places other financial institutions have abandoned.

With a good agency banking system, you will help in solving the unemployment challenges by giving people an opportunity to serve as your agents with lower operational costs.


Delayed service delivery to members

SACCO members complain of slow services such as delayed loan approvals. This may be caused by the use of manual processes, unreliable technologies, and internal bureaucracies.

Customer convenience is a key element in any financial service institution.

Delayed service delivery may end up depreciating the value or relevance of services you offer to members.

For instance, a member applies for an emergency loan, which means that they need the funds ASAP to solve an urgent matter.  If he/she ends up getting the loan a week later, that makes it irrelevant considering the time factors.



Use a reliable core banking solution that will quicken your SACCO’s operations. It’s better to get a cloud-based and multi-platform solution that can be accessed from anywhere at any time by authorized users.

For instance, the people responsible for the final approval stage are not in the office at that time, using core banking systems like CooPMIS will enable them to make approvals at any time from anywhere.

SACCOs that have used good core banking systems have had tremendous growth and improved their customer experience.

You can check out how Total SACCO improved their customer experience by 50% using CoopMIS.


Poor marketing approach.

SACCOs face a lot of competition from other financial service institutions and digital lending solutions.

Low-interest loans are no longer a selling point therefore SACCOs need to understand the market needs and act upon them.

Be honest to yourselves as a team and find the answers to these questions;

  • Do you understand your members’ needs, your target market’s needs, and what you can offer to solve their problems?
  • How unique and valuable are your products and services compared to other institutions?
  • How equipped are you to adapt to the changing trends and customer needs?
  • What are the weaknesses that you need to improve on and the strengths you can capitalize on?

To serve better and to stay relevant, you need to have the answers to the above questions.



Use systems with business intelligence and analytics capabilities to understand your members and your products better.

Such reports will help you understand the products that do well and what members really need and which products to capitalize on.

Also, your sales and marketing teams need tools that will make their work easier and more efficient. You can equip them with POS systems (Point of Sale) for easier member registration helping them capture the right data in real time.

Also, keep in mind that we are in a digital world, therefore you can’t afford to ignore digital marketing as part of your overall marketing strategy. Your current and prospective members spend hours on social media and search engines looking for helpful content and investment opportunities. Take this opportunity to engage with them, educate them on finances and recruit them into your SACCO. Make the onboarding process seamless in a way that they can do self-registration via your website, make online payments ie registration fee, and visit the branch for the final stages.


Reporting & data management challenges

Every SACCO whether tier 1 or 3 level depends on several reports for their daily operations. These reports may include financial, loans, SASRA reports for those in Kenya, membership reports, and many more.

For SACCO executives with busy schedules, it can be a challenge if they can’t access the reports at their convenience. They need high-level and well-summarized reports to understand the Saccos’ financial position.

These reports also help in proper decision making and it entirely depends on how well data is captured and used within the SACCO.



Use a SACCO Management System with better data management and reporting capabilities.

A good core banking solution enables SACCOs to use data to their advantage, and automated reporting will help in compliance and a quick decision-making process.

SACCO executives will be able to check on the status of the SACCO and other important reports on any device, any time from wherever they may be.

Also, the reports will be real-time and can be customized hence more relevant.


Manual processes, outdated technologies, and unreliable technology vendors.

SACCOs have known the importance of incorporating technologies in their day-to-day operations. Actually, in Kenya, it is a requirement for SACCOs to digitize their processes and share some sets of reports digitally with the SACCO regulator (SASRA).

Unfortunately, some SACCOs are still operating manually, some are using outdated systems and can’t meet the current demands and others are frustrated by their system vendors.



The solution starts with the SACCO management and the board. As leaders, you have to decide whether need to automate or not. Most of the time the procurement process has been delayed due to slow decision making the board, hence SACCOs end up losing money and members due to poor service delivery.

When procuring a SACCO management system, have a checklist that touches every department that will make use of the system. Ensure that it serves the purpose and get all your questions answered during the demo exercise.

To avoid working with unreliable systems and vendors, ensure that you do your due diligence, benchmark with other SACCOs that use the solutions at hand, and get reviews from the vendors’ clients.

Also, keep in mind the vendors’ portfolio, industry experience, and if they are up to date and visionary in terms of providing solutions to future challenges.


Slow decision-making from the board and management.

SACCOs are known to be quite slow in decision-making, often taking months or even years to make a simple change. This can be frustrating for members, as it can make it difficult to get things done promptly.

This can also lead to delays in service delivery and customer service.



There are a few ways that SACCOs can improve on this issue. First, they can make sure that they have a clear and concise decision-making process in place. This will help to ensure that all decisions are made in a timely and efficient manner.

Additionally, SACCOs can make use of technology to help speed up the decision-making process. For example, they can use online voting systems to allow members to have a say in decisions without having to wait for meetings.

Increasing transparency and communication with members. This way, members will have a better understanding of how decisions are made and why there may be delays in certain areas.

Simplifying processes and streamlining decision-making. This will help to reduce the overall time it takes to make decisions and get products and services to members.


Bad loans and defaulters.

During the pandemic, many SACCO members lost their livelihoods and have never fully recovered hence struggling to keep up with loan repayments. This has led to a rise in loan defaults, which presents a major challenge for SACCOs.

Some members are able to make payments but the process of doing so might be strenuous for them; especially those SACCOs operating manually and requiring members to physically visit the branches and make payments.

Defaulting on a loan can have serious consequences for SACCOs, including decreased cash flow, higher interest rates, and damaged relationships with members. SACCOs must therefore take steps to manage loan defaults and protect their financial stability.



There are a number of strategies SACCOs can use to manage loan defaults, including identifying at-risk members, offering hardship assistance, and restructuring loans. By taking proactive steps to address loan defaults, SACCOs can protect their financial health and stability.

To achieve this, you also need to put reliable systems and policies in place.

Automate your processes using a SACCO management system that enables you to easily restructure loans, and make better use of data and members’ accounts history for loan appraisals.

Make use of virtual banking solutions such as mobile banking systems to make it easier for your members to repay loans from wherever they may be without the need to visit your branches.


Stiff competition from players in the financial service industry.

SACCOs are in the business of loans and other forms of financial services.

Within the financial services industry, SACCOs do face stiff competition from other players like commercial banks, microfinance institutions, and digital lenders.

Any time a member goes for digital lenders for loans that means SACCO has lost that business to the other lenders.

One of the main reasons why this happens is because a good number of SACCOs have no capability of providing members with instant loans, say within 5 minutes. Hence, one may be a member with a good credit score in a SACCO but still prefers the digital lenders for emergencies even despite the high-interest rates within a sort payment duration.



To keep up with the competition and excel, your SACCOs need to make better use of relevant technologies and provide reliable solutions to your SACCO members’ needs.

First, take time to understand what your members want from your, analyze your strengths, and where you need improvements, and understand the competition, the industry, and the areas you can use as opportunities.

To successfully achieve this, you need to work with reliable technologies. For instance, to avoid losing businesses to other digital lenders, you need to acquire a mobile banking solution with instant loan capabilities. This will enable you to retain your businesses and members.

To address members’ requests quickly and conveniently, you also have to empower your team with the most reliable core banking systems to run your day-to-day activities. These include member registration, loan appraisal and approvals and properly managing your books to keep the SACCO afloat.


The ever-changing SACCO regulations.

In recent years, SACCOs have been grappling with an increasingly complex regulatory and compliance landscape. This has led to a number of challenges, including the need to manage risk more effectively, meet ever-changing compliance requirements and keep up with the latest regulatory changes.



There are a number of different ways that SACCOs can solve these challenges. One way is to partner with a compliance consultancy that can help them navigate the regulatory landscape.

Another solution is to invest in technology that can automate compliance-related tasks. A good example is by use of a core banking system that comes with automated SASRA reports (for those in Kenya)

Above all, SACCOs should work closely with the regulatory bodies and governing bodies for proper guidance.

Whatever solution SACCOs choose, it’s important that they take action to solve these challenges. If left unchecked, regulatory and compliance issues can severely hinder SACCO’s ability to compete in today’s market.



There are a number of challenges facing SACCOs today, but there are also a number of solutions available.

Most of the challenges can be found by coming up with strategies and strict policies that guided the daily operations of the SACCO.

Some of the most effective solutions include software that can help with member management, loan management, and accounting.

SACCOs can also benefit from mobile apps that allow members to access their accounts and make transactions on the go. To learn more about these solutions, book a free demo of any of our products.

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