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