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SACCO Shares vs SACCO deposits
#21 Posted : Wednesday, November 21, 2018 11:55:52 AM
Rank: Elder

Joined: 3/18/2011
Posts: 11,767
Location: Kianjokoma
madhaquer wrote:
Rule of thumb: Shares earn Dividends, Savings earn Interest.

Shares are used for the Sacco initial capitalisation, fixed assets and excess will be invested (The returns of this investments are the Dividends).
Savings are used to issue out loans and the interest charged on loans is used as working capital, some may be retained and the rest paid out to savers (As interest on savings).

Some SACCO have high shareholding therefore making it possible to loan out members with the excess capital.

Some SACCO's tend to be high on liquidity than others meaning they may be having cash sitting without borrowers and this is put into projects like buying land, encouraging some form of asset finance like car loans etc.. some of this projects net over the 12% revenue of the typical development loans. *Check and learn your SACCO's products.

A SACCO that is trying to grow it's shareholding, will most likely allocate a higher % of returns on shares (dividends) than returns on savings (interest).

As a member it is important to note that: Savings determine borrowing power. The maximum amount you can borrow is determined by savings. But the shares sit and earn dividends. Depending on the SACCO, you may use shares as security for a loan.
I would advise all who have over 500k in shares and deposits in a SACCO to always try to attend the AGM and read the financial reports.

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#22 Posted : Tuesday, February 05, 2019 6:29:21 PM
Rank: Elder

Joined: 11/5/2010
Posts: 2,397
seppuku wrote:
Hello good people of the earth! I have had this question gnawing at the back of my mind for a while now. It appears simple, even to myself, but I do not know the answer. I joined a SACCO not so long ago. Every time I read through their documents, two confusing terms keep coming up: shares and deposits. The reason I am confused is that every month I "deposit" money into my SACCO account ostensibly to buy more "shares". Then I come across a statement like this in their annual report:

"The management committee proposes a dividend of 30% (2010: 25%) on members’ share capital
and 11.7% (2010: 11%) on the members’ deposits for the year ended 31 December 2011."

What, pray tell, does this really mean? Somebody please set it straight for the greenhorns... Anxious

Related to your question, someone I know sold a parcel of land and bought shares (not deposits) in his sacco. A cool 10M. He did it around october 2017. Come last year AGM, the sacco declared 25% dividend on share capital. So he got his 2.5M back since dividends are usually paid to any shareholder in the sacco's books as at 31st Dec. He is targeting the same this year. By April 2021, he will have received his entire investment back. Now imagine sitting pretty knowing every year around April, you shall receive >2M unless the sacco collapses or management decides to pay peanuts as dividends for shares.
#23 Posted : Wednesday, February 06, 2019 11:24:23 AM
Rank: Member

Joined: 1/1/2010
Posts: 505
Location: kandara, Murang'a
Which Sacco is that we dig in
#24 Posted : Wednesday, February 06, 2019 12:28:35 PM
Rank: New-farer

Joined: 11/28/2018
Posts: 42
Location: Nairobi
gatoho wrote:
Which Sacco is that we dig in

Must be Kimisitu sacco...during its glory days.
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