I’m not sure what it’s for exactly but I think they have the option for me to have a savings account with them.

FOSA also means I can deposit cash to the Sacco office. I can’t do this with Sacco A. Loans are also disbursed faster.

Last loan I took, I applied for it in the morning, with completed forms submitted before noon, and by 4p.m. that afternoon the money was in my M-PESA. Last I borrowed with Sacco A, my loan took 15 working days to be disbursed.

Savings and loans

Remember that once your cash goes into the Sacco, the only way to get access to it is either through a loan or if you exit the Sacco all together.

Sacco loans are relatively cheap. Donkey years back, I took a bank loan of Sh1.5million from StanChart bank. Repayment period of five years. I was repaying per month Sh52,000.

I later took a similar loan with Sacco B, for a repayment period of 48 months. I was paying per month Sh39,000.

I don’t know about Sacco B, but Sacco A says that if you borrow a certain amount, then you are required to save a respective amount every month. It’s for risk management, I believe.

So as I was settling this Sh39,000, I was mandated to contribute every month an additional Sh7,000.

The catch with borrowing from a Sacco is that, you should have been saving with them consistently for at least six months. Then you must find guarantors to cover the amount you want to borrow.

Let me illustrate: say you’ve saved Sh100,000, which means you can borrow three times. That’s Sh300,000. You’ll guarantee yourself that Sh100,000 in your savings, find guarantors to cover that difference of Sh200,000.

Getting these guarantors is sometimes a headache.

Members you guarantee

The other headache is guaranteeing someone who fails to make their monthly loan repayment. The Sacco will give the culprit three months before they start to recover their money.

And guess where they’ll turn for recoverability? Yes. Suddenly you’ll see your contributions dwindling by the month because they’re taking care of someone else’s loan.

This happened to me once. Sh76,000 for a colleague I’d guaranteed bludgeoned my savings two months in a row. You’ve never seen me more upset. Good news is, he later repaid his loan and the amounts were reversed.

Not many people I know have such luck with guarantees who don’t keep their word.

What else?

Can Saccos collapse with your money? Yes, they can. So can banks, chamas, businesses and other investments where you’ve tied your money.

My mum’s Sacco collapsed with their life savings. TNS, Teachers of Nairobi Sacco. Thankfully she has prime property in Syokimau to show for her investment with them. She didn't give up; she has since moved to saving in a Sacco with her church.

There is no foolproof way of telling whether a financial institution is sound – I mean, look what happened with Imperial Bank – but there’re indicators to peel your eyes for.

Indicators like liquidity levels for their loans, health of the financial statements, management controls, tone at the top, members’ concerns at AGM, dividend pay-outs, investment portfolio and your good old instinct.

I think I just may ask my mum to tell me more about the warning signs of their Sacco, what red flags she may recall before it collapsed.

I trust that answers your question, Mark. Let me know.

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