Each has its strength and weakness Sacco strengths 1. Cheaper than most bank loans (99%) 2. Interest rate stays at 12% for the basic loan. There are other packages available at very different rates including one I saw at 10% p.m. depending on the add on feature (fast processing, top up, etc etc) 3. Is not dependent on income/cash flow: since it's based on shares held, given as a multiple of the same: can be triple or quintuple. Good especially for non salaried business people 4. Interest is fixed. 5. Most saccos have common bond (common factor eg profession, employer, etc) so are very friendly and personal 6. Some saccos like mine gives loans at 12% for up to 8 years (above a certain amount) Disadvantages 1. Long processing period: often 30 working days (6 weeks), unless you are taking another (more expensive option - my Sacco gives a 2 week swift loan - at 16% p.a.) 2. Guarantors can be hell to find especially with increasing amounts. And each cent lent out must be guaranteed 3. Interest on your deposits are ridiculously low: 6% pa and below in most. 4. Long queues in some saccos waiting for loans so it "helps" kujuana. But only in some very large and govt affiliated like Afya and Kilimo My experience and observation with sacco loans is much better than bank loans. The 30 day processing 'wait' means no overnight 'bright' harebrained ideas, lazima nipange mikakati. And I have realised that organic growth in sacco deposits is very useful as I take on progressively bigger projects. So a sacco must needs both patience and planning.

Let’s take a Case of Ksh 1Million Loan To qualify to borrow this amount I need to have raised 1/3 of the same of course with a guarantee of other members to get the remaining 2/3rd covered. I'll be happy to say that I have secured a 1M loan from my Sacco at 12% interest per annum (Or 1% per month as they normally put it). This of course boils down to a repayment of ksh 21,935.69 for five years. For purposes of clarity Loan: Ksh 1Million Interest rate: 12% Pa on reducing Period: 5 years(60 months) monthly repayment: Ksh 21,935.69 Reality is shocking! You have actually borrowed your own money at exorbitant rates! Let's look at the argument again. To qualify for a ksh 1M loan, you need to raise 1/3 that amount ie: Ksh 333,333 to be precise. In that case the real money you have borrowed from your Sweet Sacco is Ksh 1m – 333,333 which is Ksh 666,666.67 with a repayment of Ksh 21,936 per month for five years. Let’s see how much the interest will be for the second scenario(Reality). Loan: Ksh 666,666.67 Interest rate:35.664% on reducing Period:5 years(60 months) Monthly repayments:21,935.69 Now we say Banks are expensive at 21% etc. Who is more expensive? Your Sacco or your Bank?

Sasa kishwa yangu yaniuma.

No. You only lose the chums if you don't repay. These chums continue earning you dividends. Optimist's argument is too simplistic

If you went to your bank with a payslip that can pay 22k per month...assuming your net after major expenses is 30k.What loan amount do you think they would give you?1M unsecured?I highly doubt. Also note that the 333,333sh will earn you close to 100k in dividends over the 5yrs if rate is 6%.