How SACCOS are responding to the digitization wave

How SACCOS are responding to the digitization wave

Since their inception, SACCOS in Kenya have been providing affordable financial services to their members. They are amongst the primary sources of financial services, especially in rural areas. Millions of people save and avail loans from these cooperatives to buy groceries, agricultural tools, business equipment, and more. 

SACCOS mostly rely on cash and manual processes to manage loans and savings. The monthly contributions are deposited by members in person. However, they have embraced the use of technology in past years to improve their operations and offer a better experience to their members. Many of them started using bank accounts to deposit all savings to keep funds secure and earn interest. It also helped them to reduce the chances of theft and fraudulent activities.

SACCOS were quick to identify how technology can help them achieve more in terms of financial services. A survey was conducted in Nairobi in 2014 focussing on the effect of Information and Communication Technology (ICT) adoption on SACCOS. The survey showed that an increase in the adoption of ICT resulted in the improved financial performance of SACCOS. ICT also helped them to deliver financial services digitally to consumers with smoother payments and a reduction in service time. Another survey conducted in Kissi County highlighted the role of information technology in improving sustainable competitive edge.   

Mobile wallets changed the game

The emergence of mobile money wallets in Kenya completely changed the way how transactions were made. A growing number of people started using services like M-Pesa to make daily payments, save their money, and transfer to family and friends. Cooperative societies also found certain advantages in mobile payments. According to a survey conducted in 2018 in Kericho County, 85% of the respondents believe that mobile technologies have a positive impact on overall profits. Their sales also saw a significant rise due to the adoption of mobile money. 

Major SACCOS have gone digital or are exploring mobile technologies to enhance their productivity and efficiency. They are able to coordinate better and stay operational during the pandemic and all the movement restrictions. 

Reaping big from digitization

In the time of the COVID-19 pandemic, many SACCOS had to scale down operations, or completely shut down. Members withdrew their savings to cater to their personal needs. 

On the other hand, many SACCOS have scaled their operations with the help of technology, viewing the pandemic as an opportunity. For instance, Tai SACCOS, located in Kiambu County, is offering agency banking solutions to its members. It has introduced ‘paybill’ that enables members to make deposits in their SACCOS accounts. They have been providing mobile solutions since 2012. 

Like Tai SACCOS, many SACCOS in Kenya have shifted their operations from manual to digital. They are now efficiently delivering their services. They have managed to overcome various hurdles that the pandemic has posed in the past year.   

At Wakandi, we aim to leverage technology and mobile payments and strengthen SACCOS in Kenya and other African countries with digital capabilities. We believe technology can help us build a cashless society for people in Africa and make them ready for the future. We will talk about how Wakandi is bringing digitization to SACCOS in our next blog. 

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