Share capital = Represents your ownership of the SACCO, It is not withdrable, if you decide on leaving the SACCO you have to transfer/sell them to someone else.

Deposits = Money that you demand and is paid back to you within the limits stated on the by-laws of the SACCO when you decide on leaving the SACCO.

Thanks for your replies. You sucked out a bit of the mystery. However, it's funny that SACCOs then, appear to have an infinite number of shares. I say this because whenever a new member joins, they need not purchase shareholding from another member as is the case with limited companies.

Secondly, I do not see anywhere in the by-laws where the distinction between shares and deposits is made clear - as if it is not important enough a matter to investors. Yet, looking at the part of their annual report that I quoted two posts ago, the distinction is obviously imperative. In other words, I do not remember specifying the distribution (between shares and deposits) of my salary-deducted remittances to the SACCO. Nobody asked me. In fact, in their allotment form, I can only see boxes for shares, benevolent fund and loan repayments.

Lastly, it seems that in my SACCO, different members can have different amounts of shareholding - although the policy still stipulates a one-member-one-vote policy. This is in contrast to jerry's assertion.

Now, here are two other things I am wondering about.

a) Is it always the case that dividends earned on shares by far exceed interest paid on deposits?

b) Assuming a) above, doesn't it make sense then, to own more in shares than in deposits?

PS: One of these days I'm planning to make a trip to my SACCO office and I hope I'll come out wiser. In the meantime, let anyone feel free to share what they know about these matters for the benefit of others who may be in need of the same information. I'll be back with answers too, when I get them.

@seppuku,
It is not always the case that dividend are higher than interest. How much to pay for each category is just a management decision depending on the objective e.g if they want to raise share capital (to meet sasra regulations) they are likely to offer a higher dividend to entice members. Remember that once you buy more share to enjoy the high dividend you will not be able to reverse the investment in future if they decide to lower the dividend yield.

Jerry assertion is correct. i.e regardless of the amount a member has in share capital, when it comes to voting you are entitled to one vote just like every other member.

@seppuku. Rate of dividends and interest payment may not be the only determinant when it comes to doing ur savings. Some saccos secure loans on deposits only and not on shares. So if u are for credit like me u go for deposits. But is it true as a member u can choose how much goes to Shares?

This is very good education for me. In my sacco they have a system where if you save upto a certain category, then you are required to 'hike' your share (the ownership part) to a certain level. I didnt know that this share earns some income, now that i do, i am going to try ane ensure I save more so as to reach the next band which will qualify me to enter a certain blacket. Thanks Wazua for all the financial education I am getting

Wewe boss, go slow and find out at least some minimum facts before you unleash this kind of misinformation. Am sure even the cairman of your sacco or even some eomployees of your sacco can enlighten you. Theres no requirement that any and I mean ANY sacco must have FOSA. Where did you get that from????????? Please go to the Governement Printer (iko hapo Haile Sellasie Avenue next to Kenya Poly) and get yoursels a copy of the Sacco Societies Act (I thinks its Kshs 40 only) and refresh your mind. Ok, let me assist you here in the meantime. The relevant ministry realized that the saccos that operated fosas were doing it haphazadly without any regulation and hence the establishment of SASRA so that any sacco that OPTS volutarily to operate fosa must apply for a licence from Sasra and must meet the minimum set requirements. The main aim of this is to protect members deposits.

The Saccos currently licenced t operate FOSAS are less than 100 saccos out of more that 13,000 sacos in kenya. More info please google sasra and go to their website. Sasra is Sacco Societies Regulatory Authority.

On Shares, each sacco decides on its own (through AGM) the minimum value of shares that every member mush have then all the other moneys coming from such members go to deposits automatically. Since members contribute monthly, the first few months contributions got to Shares until the full value is realized and thereafter to deposits. Its very rare to find a sacco where shares for every members is valued at more than kshs 5,000/=, very rare indeed. However, wanjikus refer to everything they contribute to the sacco as SHARES.

Has Kimisitu Sacco complied? I happen to have keyed in their vision!

just seen the website of this sacco and came across this. I'm impressed Saccos are thinking out of the Box

"Kimisitu has partnered with Text Book Center and Hot point Appliances Ltd in pacts that will see members enjoy discounts from items bought in respective outlets or their networks countrywide."

what about finnlem..any idea?

Rule of thumb: Shares earn Dividends, Savings earn Interest.

Shares are used for the Sacco initial capitalisation, fixed assets and excess will be invested (The returns of this investments are the Dividends).
Savings are used to issue out loans and the interest charged on loans is used as working capital, some may be retained and the rest paid out to savers (As interest on savings).

Some SACCO have high shareholding therefore making it possible to loan out members with the excess capital.

Some SACCO's tend to be high on liquidity than others meaning they may be having cash sitting without borrowers and this is put into projects like buying land, encouraging some form of asset finance like car loans etc.. some of this projects net over the 12% revenue of the typical development loans. *Check and learn your SACCO's products.

A SACCO that is trying to grow it's shareholding, will most likely allocate a higher % of returns on shares (dividends) than returns on savings (interest).

As a member it is important to note that: Savings determine borrowing power. The maximum amount you can borrow is determined by savings. But the shares sit and earn dividends. Depending on the SACCO, you may use shares as security for a loan.
I would advise all who have over 500k in shares and deposits in a SACCO to always try to attend the AGM and read the financial reports.