Savings and Credit Cooperative Societies (SACCOs) are recording an increase in the uptake for loans. In a story published by the SACCO Review, the demand for development loans is in sharp contrast with what was the case for the better part of last year after many members put their projects on hold at the peak of Covid-19 disruption.
This is good news. SACCO members should use their SACCOs as drivers for their investments. They should continue saving and borrowing from their SACCOs in order to build wealth and support their developments. SACCOs should also encourage their members to take up loans.
A rise in demand for loans is good news for many SACCOs since interest generated from such lending forms the bulk of income from which members earn dividends.
SACCOs will however have to ensure that lending does not drain their liquidity. SACCO Societies Regulatory Authority (SASRA) liquidity ratio guidelines require deposit-taking (DT) - SACCOs to at all times maintain a minimum of 15 percent of their savings deposits and short-term liabilities in liquid assets.