Personal Finance

Saccos should analyse financial reports to understand members

A manager makes a presentation. Co-operative societies need to design training to equip menbers with relevant money literacy skills. Photo/FILE
A manager makes a presentation. Co-operative societies need to design training to equip menbers with relevant money literacy skills. Photo/FILE 

“How well do you understand your sacco members?” This is a question that I usually pose to saccos leaders or management every time I get an invitation from them to facilitate training on personal finance.

Interestingly from the responses I have received, it is evident that a majority of the sacco leaders and managers hardly understand their members beyond the numbers.

This often makes it difficult to identify the training needs of the sacco members when planning for a workshop.

Due to this limitation, most training activities have never had any significant impact on the sacco members. It is worth noting that saccos unlike other financial institutions are created with the aim of improving the financial welfare of members through compulsory saving and affordable credit facilities.

Given this unique objective, training on personal financial wellness has been identified as a way of empowering sacco members to achieve their financial dream by equipping them with the money management skills on how to enhance their savings as well as use debts to create wealth.  


Such training, however, can only be of impact or effective if the needs are identified and analysed beforehand. The vast membership in saccos nevertheless makes it difficult to identify the specific needs of each member when planning for training.

Just like the performance of a sacco changes every year, members’ training needs change too based on their financial behaviour. To effectively understand members, sacco can easily analyse their annual financial reports.

Here is how a sacco can use the reports to identify members’ training needs:

1. Revenue growth: Every financial report shows the revenue earned by the sacco in the year under review from various sources but significantly from interest income earned from loans and advances.

Compared with the previous year of performance, the growth in the interest income earned from loans and advances provides a good yardstick to analyse the financial behaviour of the sacco members.

A decline in the interest income earned from loans and advances may signify a slump in the borrowing, which may imply a reduced borrowing appetite.

To enhance its performance, a sacco must work on how to increase the borrowing by its members. This forms a training need for sacco members. In such a case, saccos emphasise on training to equip members with investment skills and opportunities to explore.

Certainly, without any investment opportunities for members to explore, saccos will only attract those who borrow for emergency or to expend instead of investing. This type of borrowers can hardly sustain the sacco but may translate into bad debts.

By equipping members with investment skills through training, saccos are able to attract potential borrowers who will seek loans to invest and not for consumption.

The benefit this category of members is that their borrowing is usually significant and sustainable. Therefore, as a way of improving its revenue growth, sacco should invest in training members on how to identify potential investment opportunities and the skills to apply.

2. Loans and advances: It is certain that a slump in the growth of loans and advances will ultimately lead to decline in interest income. A part from looking at the growth in the loan books, saccos should further focus on the quality of loans disbursed.

This quality aspect of loans can be captured from cases of defaults or delinquencies recorded from the loan books over the period.

Increased cases of delinquency implies that although the members may have investment opportunities to explore, they still lack skills on personal debt management — simply how to manage debts.

This trend can inform the sacco on how to tailor a specialised training for members who have borrowed to equip them with skills to manage loans.

3. Changes in members deposit: The sacco should also analyse the growth in deposits because this serves as a source of capital to lend out to members. A slump in deposits may imply that members have reduced their contributions to the sacco perhaps due to increased financial burden.

So as to boost deposits, saccos should train members on financial goal setting to be able to motivate them to save beyond the minimum contribution set by the sacco.

When members know what they saving towards, they will be able to sacrifice by saving extra income because the drive will be from within and not from the sacco.  

Mr Opiyo is a training manager and coach at Tolerance Employee Financial Advisors Ltd. Email: [email protected]