How to Start a SACCO in Kenya: A Complete Guide for 2026

Learn how to start a SACCO in Kenya in 2026 with this step-by-step guide. Discover legal requirements, registration process, capital needs, and management tips.

Summary

Starting a Savings and Credit Cooperative Organization (SACCO) in Kenya can be a powerful way to empower communities financially. SACCOs help members save money collectively, access affordable loans, and achieve shared financial goals. This guide walks you through every step—from planning to registration—to help you start a successful SACCO in Kenya.

Introduction: Why Start a SACCO in Kenya?

SACCOs have become one of the most trusted and accessible financial models in Kenya. From teachers’ SACCOs to farmers’ and transport SACCOs, these institutions play a major role in promoting financial inclusion and independence.

Starting a SACCO allows members to pool their savings, offer loans at lower interest rates, and generate sustainable income. According to data from the SASRA (Sacco Societies Regulatory Authority), Kenya’s SACCOs collectively manage billions of shillings in assets—showing the strength and potential of this sector.

If you’re looking to empower a community, group, or business circle, here’s how to start a SACCO in Kenya the right way.

Step 1: Understand What a SACCO Is

A SACCO (Savings and Credit Cooperative Organization) is a member-owned financial institution registered under the Co-operative Societies Act (Cap 490). Its main purpose is to mobilize members’ savings and provide affordable credit.

Unlike commercial banks, SACCOs focus on members’ welfare rather than profit. Members buy shares, save regularly, and can borrow based on their savings and shares.

Step 2: Define Your SACCO’s Purpose and Membership

Before registration, you must define who the SACCO will serve and what its goal will be.
Common types include:

1. Community SACCOs: Based on geographical areas.
2. Employee SACCOs: Formed within companies or organizations.
3. Agricultural SACCOs: For farmers and agricultural traders.
4. Investment SACCOs: For members looking to invest collectively in real estate or business ventures.

Clearly defining your target group and purpose ensures cohesion and easier management.

Step 3: Meet the Minimum Membership Requirement

To start a SACCO in Kenya, you must have a minimum of 10 members. However, for better capital and stability, it’s advisable to start with at least 30 members who share a common interest or goal.

Each founding member must:

• Be 18 years or older.
• Be a Kenyan citizen or legal resident.
• Contribute an agreed minimum share capital.
• Commit to regular savings contributions.

Step 4: Draft Your SACCO By-laws and Constitution

Your SACCO’s by-laws act as the governing rules of the organization. They outline:

• Membership requirements and exit procedures.
• Roles and duties of management committees.
• Savings and loan terms.
• Interest rates and dividend policies.
• Dispute resolution mechanisms.

The by-laws must comply with the Co-operative Societies Act and be approved by the Commissioner for Co-operatives Development.

Step 5: Choose a Suitable Name and Register

You’ll need to choose a unique SACCO name and verify its availability at the State Department of Co-operatives. Once confirmed, proceed to register.

Documents required for SACCO registration in Kenya:

1. Application form for registration (obtained from the Co-operative office).
2. Proposed SACCO by-laws.
3. Minutes of the first meeting (signed by all members).
4. Names, addresses, and ID copies of founding members.
5. Proof of share capital contribution.
6. Payment receipt for the registration fee (usually KSh 3,000–5,000).

Upon approval, you’ll receive a Certificate of Registration from the Commissioner for Co-operative Development.

Step 6: Register with SASRA (for Deposit-Taking SACCOs)

If your SACCO intends to take deposits and offer financial services similar to banks, it must be licensed by SASRA (Sacco Societies Regulatory Authority).

SASRA requirements include:

• Minimum capital of KSh 10 million for deposit-taking SACCOs.
• Business plan and feasibility study.
• Qualified management team and internal control systems.
• Clear policies on savings, lending, and risk management.

Non-deposit-taking SACCOs can operate under the general Co-operative Societies Act without SASRA licensing.

Step 7: Establish Leadership and Management Structure

A successful SACCO relies on effective governance. The structure typically includes:

• General Assembly: All members; the highest decision-making body.
• Management Committee: Elected officials responsible for operations.
• Supervisory Committee: Ensures accountability and transparency.

It’s vital to elect qualified, trustworthy individuals who understand financial management and cooperative principles.

Step 8: Open a SACCO Bank Account

After registration, open a bank account in the SACCO’s name. All member contributions, loan repayments, and business transactions should pass through this account for transparency.

Ensure signatories are approved by members, usually including the Chairperson, Treasurer, and Secretary.

Step 9: Develop a Business Plan

A business plan helps guide your SACCO’s operations, sustainability, and growth strategy. It should include:

• Vision, mission, and objectives.
• Target market and member profile.
• Marketing and outreach strategies.
• Savings and loan products.
• Financial projections for 3–5 years.

Having a clear roadmap helps attract members and maintain regulatory compliance.

Step 10: Mobilize Members and Raise Capital

Once your SACCO is registered, begin member recruitment and capital mobilization. Encourage members to increase savings and buy more shares.
You can also:

• Offer incentives like dividends and bonuses.
• Partner with employers for check-off systems.
• Conduct awareness campaigns and financial education programs.

Step 11: Set Up Accounting and Management Systems

Use reliable accounting software designed for SACCOs such as SaccoPro, Coretec, or Fintech SACCO Suite to manage savings, loans, and reporting.

This helps maintain accurate records and ensures compliance with SASRA and auditing standards.

Step 12: Maintain Compliance and Continuous Growth

Compliance is key to building trust and sustainability.
Ensure your SACCO:

• Files annual returns and audited accounts.
• Conducts annual general meetings (AGMs).
• Observes cooperative laws and SASRA guidelines.
• Provides regular member updates.

Regular audits and transparent management attract more members and enhance credibility.

Performance and Sustainability Tips

• Invest wisely: Diversify into low-risk ventures like real estate or agribusiness.
• Educate members: Financial literacy builds commitment and reduces loan default.
• Leverage technology: Mobile money and online platforms simplify deposits and withdrawals.
• Build partnerships: Collaborate with microfinance institutions and government programs.

Common Challenges When Starting a SACCO

1. Limited capital – overcome through gradual member contributions.
2. Poor governance – solve by training management committees.
3. Loan defaults – reduce through strict vetting and guarantees.
4. Regulatory delays – plan ahead and follow all requirements precisely.

Final Verdict

Starting a SACCO in Kenya requires dedication, transparency, and strong management—but the rewards are worth it. A well-managed SACCO can transform communities by providing access to affordable credit and promoting savings culture.

If you follow the right procedures, engage your members actively, and maintain compliance, your SACCO will thrive and make a lasting impact.

FAQs on How to Start a SACCO in Kenya

1. How many people are needed to start a SACCO in Kenya?
A minimum of 10 members is required, though more members improve financial stability and governance.

2. How much capital do I need to start a SACCO?
Non-deposit-taking SACCOs can start with around KSh 100,000, while deposit-taking SACCOs need at least KSh 10 million as per SASRA regulations.

3. What’s the difference between a SACCO and a microfinance institution?
A SACCO is member-owned and operates on cooperative principles, while a microfinance institution is investor-owned and primarily profit-driven.

4. How long does SACCO registration take in Kenya?
Registration typically takes 30–90 days, depending on documentation, verification, and approvals by the Co-operative Department.

5. Who regulates SACCOs in Kenya?
The Co-operative Department regulates all SACCOs, while SASRA (Sacco Societies Regulatory Authority) oversees deposit-taking SACCOs.

6. How much does it cost to start a SACCO in Kenya?
Between KSh 100,000–500,000 for small SACCOs and KSh 10 million for deposit-taking SACCOs.

7. What are the requirements to start a SACCO?
At least 10 members, a common bond, by-laws, proof of share capital, registration forms, and a fee of KSh 3,000–5,000.

8. What is the minimum capital requirement for SACCOs?
KSh 10 million for deposit-taking SACCOs; non-deposit ones can operate with smaller capital based on scope.

9. How do SACCOs make money?
Through loan interest, membership fees, investments, and transaction charges.

10. What are the risks of a SACCO?
Loan defaults, poor leadership, fraud, liquidity issues, and non-compliance with SACCO regulations.

11. Which business can I start with 500K in Kenya?
You can start a small SACCO, farming venture, car wash, or mobile money business.

12. What makes a SACCO fail?
Weak governance, poor loan recovery, corruption, and lack of transparency.

13. Which SACCOs are banned by NTSA?
Only transport SACCOs violating regulations are banned. Check the latest list on the NTSA website.

14. Can one withdraw money from a SACCO?
Yes — members can withdraw savings, but shares can only be transferred or redeemed upon exit.

15. What happens when a SACCO collapses?
A liquidator is appointed, assets are sold to pay debts, and members may recover part of their deposits.

16. How many members should a SACCO have?
At least 10, but 30 or more members improve sustainability and capital growth.

17. What makes a SACCO successful?
Transparency, strong leadership, good loan management, and member trust.

18. Do savings in a SACCO earn interest?
Yes — savings earn 5%–12% interest yearly, depending on profits.

19. What is the 2/3 rule in SACCO?
At least two-thirds of committee members must approve major SACCO decisions to ensure accountability.

20. How to start a small SACCO?
Gather 10 members, draft by-laws, register under the Co-operative Societies Act, open a SACCO account, and start saving and lending.

Related: How to Buy Safaricom Shares in Kenya: A Complete Step-by-Step Guide

Final Thoughts on How to Start a SACCO in Kenya

Starting a SACCO in Kenya is not just a business idea—it’s a community empowerment journey. With the right members, solid governance, and compliance with cooperative laws, your SACCO can become a sustainable financial institution that transforms lives.

If you’re ready to take the next step, visit the Ministry of Co-operatives website or your county’s Co-operative Office to begin your registration process.