The Importance of Savings Mobilisation

There should be a Savings Mobilisation Strategy that highlights the importance of savings as a key to national economic development in Kenya. The growth of the economy depends on capital accumulation, which in turn depends on investment and an equivalent amount of savings to match it. Savings can therefore be used to finance investments which boost production and subsequently an increase in household income. Savings mobilisation by the SACCOs is thus important and critical if the overall standard of living style of the membership is to improve.
Savings mobilisation is all about the SACCOs encouraging their membership and community members to join and begin saving with the SACCO. This requires the SACCOs to become safe and sound institutions where savers can place their deposits with the expectation that they will receive the full value of their funds, plus a real return, upon withdrawal. Savings mobilisation therefore requires the development of appropriate savings products to satisfy the local demand for voluntary savings services and marketing
those products to savers of varying income levels. Effective savings mobilization requires clear principles related to:
 Safety of the members’ deposits (without risk of loss)
 Interest on savings (interest should regularly be paid to the members)
 Liquidity (the members should be able to withdraw their savings when needed)
The SACCOs, like any financial institution need to provide services to its members of diverse income groups while tapping into savings deposits as a relatively stable, low-cost source of funds to finance growing its loan portfolios. The mobilised savings are then loaned to members to fund productive investments in agriculture, education, housing, and microenterprise in the local community. SACCOs have long realised that savings deposits provide them with a cheaper source of funds compared to borrowing from commercial banks and other sources. The market cost of paying individual members tends to be lower than the non-subsidized loans in the financial markets. The existence of savings deposits as an independent source of funds will reduce the dependence of the SACCOs on subsidies from development partners. Savings being internally-generated funds provide an independent and sustainable supply of funds that can be invested in the SACCOs.

Adapted from RWANDA COOPERATIVES AGENCY (RCA)- MODULE TWO: SAVINGS MOBILISATION AND MANAGEMENT FOR
THE UMURENGE SACCOS.