A Savings And Credit Cooperative Economics Essay

A Savings And Credit Cooperative Economics Essay The inception of SASRA in October, 2009 made it a requirement for SACCOs in Kenya to acquire licenses in order to be take deposits. Since then, there has been a steady increase in the number of deposit taking SACCOs in Kenya seeking licensing with already licensed and operational SACCOs growing in terms of membership, deposits, total assets, gross turnover, loans granted, and equity (SASRA, 2011, p. 25). A total of 570 SACCOs were registered between 2009 and 2010 increasing total registered and operational deposit taking SACCOs to 3,632. SACCOs are increasingly allowing persons who were not in the original bond to become members. This is to respond to competition and ensure sustainability as the traditional market shrinks. For example rural farmer based SACCOs are rebranding to position themselves as a national SACCOs so as to attract non farmers such as business persons and employed persons (SASRA, 2010). A Savings and Credit Cooperative (SACCO) is one â€Å"that pools savings for its members providing them with credit facilities† (UN-HABITAT, 2010). The general objective of SACCO is to promote the economic interests and general welfare of its members. They are formed based on a common bond which could be economic activity, geographical location or employment. The ICA Statement on the Co-operative Identity defines a cooperative as â€Å"an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise†. Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others (Bibby & Shaw, 2005). The 1995 ICA Congress also reformulated seven principles of co-operatives. In summary, they are: Voluntary and open membership Democratic member control Member econom ic participation Autonomy and independence Education, training and information Co-operation among co-operatives Concern for the community Different SACCOs provide a number of products which include but are not limited to credit services, deposit and savings facility, cheque clearing, bankers’ cheques, standing orders, safe custody, and salary advances. History of SACCOs The pioneers of modern cooperation emerged in working- class environments in European Industrial cities of the 19th Century. In the 1840s,the first to industrialize countries (Great Britain and France),pioneers of co-operative invented models of the consumer cooperative and the labor cooperative to defend and promote the interests of working-class families in the face of the social disasters caused by industrial revolution. The second generation of the pioneers of modern cooperation emerged, in certain European rural environments in the late 19th century. In the 1860s, these pioneers created the models of agri cultural cooperatives and savings and credit cooperatives inspired by the success of the consumer cooperatives formula in Great Britain and based on old traditions of rural solidarity aimed to meet the primary economic needs, which went unsatisfied. Agricultural cooperatives then enabled families of farmers and livestock raisers to organize their own supply systems of agricultural inputs and market their products and no longer depended on merchants and businessmen in the cities. The SACCO helped them to stop depending on moneylenders and to find the credit necessary to modernize their agricultural cooperatives (Mwakajumilo, 2011) .