Will saccos step in for Kenyans this festive season as spending bug bites?

Unfortunately, we will spend money we don’t have. Studies indicate that many families will spend more than their monthly income in the next two months to fund festive activities.

Why is this so? Kenya, like many liberal capitalist economies, has gradually shifted from a market economy to a market society, where nearly every aspect of life is now transactional and commercialised.

Social interactions that once depended on community reciprocity now require money. This means we can no longer rely on relatives or neighbours for ‘free’ assistance.

The consequences are evident in the widening gap between the wealthy and the poor. The more things we need money to buy, the more severe the effects of inequality become. Rising inequality weakens social cohesion, diminishes trust, and undermines confidence in institutions.

Money is now the main determinant of enjoying social interaction, let alone fun opportunities, and is even a requirement for acceptance into relationships. Those without adequate resources during this festive season face serious isolation and loneliness.

Without money, life is hard. The festive season magnifies these hardships, especially for low- and middle-income households.

To deal with this, many families will have to go for very expensive short-term credit to meet the social expectations and personal needs, placing further strain on household finances and the credit market in the coming months. ‘Njaanuary’ always comes.

In this economy, low-income households are more disadvantaged. They are faced with limited access to affordable credit, which reduces opportunities for entrepreneurship and asset accumulation. Over time, inequality hardens into structural poverty.

Addressing these disparities requires institutions that distribute not only income but also opportunity and social capital. Kenya’s cooperative movement provides a credible response to these challenges.

Rooted in collective self-help, savings and credit cooperatives (saccos) embody economic democracy by pooling resources to serve members rather than external shareholders. They mitigate market failures through shared governance, risk pooling, and local knowledge, enabling small savers to access credit, lower borrowing costs, and promote inclusive growth.

The move toward a market society has intensified inequality and eroded social trust. Already, we see complaints of dire poverty amid economic progress and positive macroeconomics. The cooperative sector could ensure that prosperity is shared more equitably across society.

The telos of saccos is member empowerment. As households prepare for the festive season, saccos should step in and provide affordable loans, flexible repayment terms, and a culture of savings and accountability to its members to restore their dignity and welfare.

According to the Sacco Societies Regulatory Authority (Sasra), the sector’s total assets is now more than Sh1 trillion, equivalent to about 6.4 percent of Kenya’s gross domestic product. Total membership is approaching eight million Kenyans, nearly 30 percent of the working population.

Clearly, saccos are now vital channels for household savings and credit, especially low-income workers and small-scale traders. They finance housing, education, agriculture, and business development, areas often neglected by commercial banks.

It is time for government and regulators, including Sasra, the CBK and Treasury to recognize the impact and role of Saccos and the cooperative movement in addressing pressing social welfare concerns of Kenyans, including cushioning the vulnerable groups in our society from market shocks.

With the right policy support, Saccos can play a greater role in financing micro, small, and medium enterprises (MSMEs), facilitating agricultural value chains, and mobilising domestic savings for productive investment. As Kenya seeks to reduce inequality and sustain growth, the cooperative movement remains one of the most effective instruments for inclusive finance.

In the credit market, there are many tools and solutions that are already supporting Saccos leverage data and technology to drive sustainability in saving and credit risk management.

Already Sasra is doing a lot in strengthening of governance, expanding digital systems, and adopting risk-based supervision.

Gideon Kipyakwai is the CEO, Metropol Credit Reference Bureau