Savings and Credit Cooperatives (Saccos) in Kenya are beginning to cut back on dividend payouts and retain more earnings as a means of strengthening their financial foundation, a shift prompted by stricter regulatory oversight.
According to recent disclosures, the capital adequacy ratio for deposit-taking Saccos climbed to 17.8% by June 2025, while non-withdrawable deposit-taking (NWDT) Saccos saw their ratio increase to 18.52%, both well above the thresholds set by the Sacco Societies Regulatory Authority (SASRA).
It is a push toward building stronger capital buffers and comes in the wake of regulatory pressure to move away from paying overly generous bonuses, interest rebates, and dividends.
According to a Business Daily report, regulators, including SASRA, the Ministry of Co-operatives, and the Commissioner of Cooperatives, have warned Saccos against inflating surplus figures or using external borrowing to cover payouts.
The drive for more conservative financial management is partly a response to earlier turbulence in the sector that involved a multi-billion-shilling fraud where the Kenya Union of Savings & Credit Co-operatives (KUSCCO) exposed major vulnerabilities in how Saccos were operating.
In tangible terms, Saccos cut their average dividend rate on share capital to 10.46% in the year ended December 2024 (down from 10.92%), and reduced the interest on deposits to 7.14% from 7.45%.
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Despite the lower rates, the absolute amount paid out in dividends still rose, from Ksh.55.06 billion in 2023 to Ksh.59.74 billion in 2024.
Meanwhile, earnings retained by Saccos grew significantly, anchored on their retained earnings and reserves, which jumped 17.55% in 2024, reaching Ksh.197.54 billion, up from slower growth the prior year.
According to SASRA’s acting CEO, David Sandagi, dividends are not the only way Saccos deliver value to members.
He said they also have access to affordable loans, for instance, which remains a key part of their value proposition.
This even as smaller Saccos face a tougher balancing act as they risk alienating members expecting high returns if they retain too much capital, yet lack the cushion to absorb future shocks if they pay out too much.
Overall, the move toward tighter capital management suggests Saccos are taking a more cautious but sustainable approach, prioritizing long-term stability over short-term payouts.
