While considering ways of saving and growing one's income, youths often hear of Savings and Credit Co-operative Societies (SACCOs) and chamas, but which one is better and why?
According to Nicholas Kamonye, the Managing Director and Chief Executive Officer of Co-op Consultancy, a subsidiary of Co-operative Bank Group, SACCOs offer a structured way to pool financial resources, access affordable credit and build wealth collectively, unlike chamas.
Kamonye says SACCOs provide members with a formal ownership structure, governance systems and opportunities to grow their financial investments.
"A chama is not a cooperative but is a good place to start," Kamonye explained during the latest episode of Co-op Youth Forums on Friday, November 13. According to Kamonye, SACCOs operate under formal structures that define how members contribute, borrow and participate in decision-making.
Unlike an informal chama, a registered cooperative exists as a separate legal entity from its members. It can own property, enter into contracts, sue and be sued in its registered name.
"If you register a cooperative, it is registered as a separate legal entity from the members. It can own property, sue or be sued," Kamonye explained. A cooperative must be registered by the Commissioner for Co-operative Development under the Co-operative Societies Act.
SACCOs seeking to undertake regulated deposit-taking business must also obtain a licence from the Sacco Societies Regulatory…
