SMEs urged to consider Saccos when seeking credit

Cooperative and Micro, Small and Medium Enterprises (MSMEs) Cabinet Secretary Wycliffe Oparanya has encouraged small and medium business owners to explore Savings and Credit Cooperative Societies (Saccos) as an alternative source of affordable credit to fuel their growth. These societies offer a vital platform for small-scale traders to save, secure loans, and foster sustainable businesses, particularly in a climate where many entrepreneurs struggle to obtain affordable capital.

Addressing traders in Trans Nzoia County, Oparanya cautioned against relying on informal lenders who levy exorbitant interest rates, emphasizing that such borrowing can erode livelihoods and hinder business sustainability. He pointed out that when entrepreneurs join Saccos, many mistakenly refer to them as "chamas," unaware of the associated risks. The treasurer of a Sacco can misappropriate funds, or during periods of slow business, members are obligated to contribute regardless, which can be a source of hardship.

Oparanya urged traders to become active members of Saccos and consistently save, even if the contributions are modest. He highlighted that incremental savings can accumulate into substantial amounts, which can later be leveraged to obtain credit and invest in business expansion. "I want people to invest and join SACCOs to be able to take loans for their businesses. Come in large numbers and save even as little as possible. By the end of the month, the accumulated amount will be of help," he stated.

The CS noted that technological advancements have revolutionized the cooperative sector, enabling members to access Sacco services, track their savings, and conduct transactions via digital platforms without needing to visit physical branches. "Because of technology, you can use mobile banking regardless of where you are. Therefore, you must embrace technology as a business person," he asserted.

Oparanya announced that the Government is spearheading initiatives to broaden access to capital for small businesses and budding entrepreneurs. The Hustler Fund has already disbursed over Ksh 90 billion, with 28 million Kenyans registered, and approximately two million people obtaining loans daily through this fund. He further revealed that the Government is utilizing the NYOTA Fund to assist young individuals, while simultaneously promoting Sacco membership to cultivate a savings mindset and enhance credit accessibility.

He praised the Cooperative Bank and the Cooperative Insurance Company (CIC) for offering financial and insurance services to cooperative members, stating that these measures assist small businesses in overcoming obstacles related to capital access and high interest rates.