03/07/2023
THE FUTURE OF THE SACCO IS IN MERGING
For those who may not know what a SACCO is, it is basically a saving scheme. The term is an acronym of the words “Savings and Credit Cooperative Organization”. These schemes have become a preferred means of saving. With over a decade of saving, many SACCOs have grown over time. The savings have become substantial. The question is - What next then?
Of course most Saccos are structured and registered as companies. They have a board or the likeness of this in the form of a committee or various committees that handle different aspects of the SACCO. They are well managed and monitored. It is also important to note that quite often, the management of SACCO is not paid as this is essentially voluntary.
But, what happens when the Sacco has reached its maturity? By maturity, I mean, when the savings have grown substantially. Over the years, the Saccos that have sought advice, have suggested investments in extremely low risk investments. The typical go to investment is an investment in land or real estate. Very rarely, have Saccos preferred to take on real business. It is understandable though.
The thing is that money saved is psychologically taken away from the money to be spent. Ideally when one is setting money aside to save, it is not money they would like to see thrown around as a risk. Now, this is true both at micro membership level and the macro enterprise level of the SACCOs. But, this ought to be perceived differently.
When money is collected and accumulated, no matter how much it is, it is still money. Amongst the four factors of production, money is simply Capital. It therefore must be invested. It just can’t be saved infinitely. So, if the SACCOs have the capital, it is time to start thinking about capital for what it is. It is important to think about mergers with other SACCOs and to think about having money or fund managers.
Merging SACCOs will effortlessly make sense because whereas each SACCOs may have different members, they all have a like minded goal - to save money collectively. The mergers of Saccos will create even more capital and give the SACCOs more leverage in investment options. It will also bring in diversity in thought and goals. Some Saccos are founded by technocrats with limited knowledge about investing of capital. Merging will create the synergy that is needed to bring in the requisite knowledge. Also, different Saccos have different appetites for risk. Merging can help spread the risk and also enable the SACCOs to have more room to accommodate more of the risks involved in investment. Of course there will be a lot of institutional adjustments to be made. But, that cannot be a hindrance to the idea of merging. It is not only necessary but, inevitable.
