The history of SACCOs in Kenya is , without a doubt, rich. It dates back to the early 1900s. From small farmers’ groups, we now have well organized financial institutions all over country. Population growth and increased financial literacy levels have led to more of these institutions. The demand, competition and the flexible government regulations has also encouraged the mushrooming of SACCOs in Kenya. The number of these institutions currently stands at close to 14000. These control about 1 trillion shillings (approximately 100B USD). These contribute to about 43 percent of the Gross Domestic Product (GDP).
This vibrant and dynamic industry has had it’s challenges too. Some of them are; liquidity/cash flow problems; loan backlog and delayed refunds of members deposits. Others are huge member data; high competition from other SACCOs, banks and micro finance institutions; fraud and high cost of operations.
On the other hand, the economic environment has been characterized by uncertainty. This affects mostly low income earners who form the largest target market for the SACCOs. History has left no doubt that innovation is a critical element for SACCOs. Through it, SACCOs are able to meet the ever growing changes in customer preferences.and to gain competitive advantage; as well as develop products for the future. This has called for change in the approaches these institutions have been managing their members and finances.
Management systems in SACCOs have come to ease the rapid changes in the industry. The first management systems used in Kenyan SACCOs were manual books that carried all member details, shares and loan data. Loss of these books meant loss of money. Human interference was always common. There was no shortage of fraud cases, among other challenges.
The introduction of computers and software has drastically changed all that. The combination of the two has provided grounds for creation of innovative systems. These can gather information that helps in decision making. A SACCO management system can do what a whole department used to in the past. The decision making process is faster and shorter now. There is also an increase in productivity and sales in SACCOs using good management systems.
Today, SACCO management systems provide more efficient and effective ways of running operations. They serve as the backbone of an organization’s operations. Processes such as member registration process, loans applications & disbursement are done faster and with much ease. Others include; financial accounting and reporting; shares/deposits management; front office administration and asset management.
Some systems are compatible for integration with other platforms such as banks. This makes them more convenient for both the institution and the members. Today, most of the Saccos are able to offer very cost effective loans and higher interests on deposits. This has resulted from reduced costs of operations due to the use of systems. As a result, the institutions are more profitable, and the living standards of their members improved.