The co-operative sector impacts on lives of close to 70% of Kenya’s population, contributing highly to the country’s Gross Domestic Product (GDP), Facilitating more than 31% of The National Savings and providing employment directly and indirectly to millions of Kenyans.

Despite the prevailing high cost of living brought about by the high inflation rate, the Finance Act 2023 will reduce the disposable income of many income earners due to the revision of the PAYE upwards as well as the introduction of 1.5% contributions towards the housing development fund.

The Finance Act dictates that an employer and employee pay a percentage of the employee’s basic monthly salary to the National Housing Development fund. This, in turn, reduces employees’ take-home pay and increases employers’ costs, potentially impacting employment opportunities.

Although the Finance Act 2023 and the housing development fund are bound to affect the disposable income of income earners, financial institutions such as Saccos will feel a far-reaching effect because they transact and undertake business only with its members.

This is because, unlike other financial institutions, SACCOs are member-based socio-economic enterprises and anything that affect their members’ purchasing power affects their survival. Membership in SACCOs remains an important performance and growth monitoring tool as the more members, the higher the clientele and customer base. Consequently, harsh economic conditions usually affect Saccos through an increased rate of dormant members and a low saving rate.

With the harsh economic situation expected from the Finance Act 2023, many Saccos members will need to either choose to accept the prevailing conditions and maintain their membership or reduce or stop their monthly contribution to the Saccos.

How SACCOs Can Empower Their Members to Build Financial Resilience

Whereas the Saccos may not alter the changes on the Finance Act to cushion their members from the impact, they do have a role to empower their members to build some financial resilience for the tough economic conditions ahead.


This financial resilience will prepare members to deal with the harsh economic conditions by:

  • Enabling members to adapt to changing financial circumstances such as reduced disposable income – meaning instead of terminating their membership, the members can instead readjust their monthly budget by reducing their expenses.
  • Enabling members to maintain a sense of financial stability and security during adverse economic conditions.

But how would Saccos support their members through the journey of financial resilience? There are 3 major approaches that the Saccos can leverage to support their members through their journey of financial resilience:

  • Saccos can adopt a proactive approach to financial education and literacy – where they train their members on how to budget, save and borrow wisely during tough economic seasons. This will equip members with the Money management skills to adapt to the changing financial circumstances.
  • Saccos can also roll out emergency loans as well as insurance products that members can leverage on to bounce back from the harsh economic conditions. Such insurance products will include income protection to safeguard the members in case of any possible job loss that can result from the impact of adverse economic conditions.
  • Saccos can also adopt a remedial approach to save those who will already be suffering from the impact of the harsh condition such as job loss. Such remedial action especially for those members who are going through income loss will include introducing flexible ways of managing existing debts through debt reliefs, as well as loan refinancing.

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