What sacco members must do to increase dividend payouts

What sacco members must do to increase dividend payouts

Members of Kimisitu Saving Society Co-operative go through the annual report and Audited Accounts during an annual general meeting in Nairobi. Photo/FILE

By Isaiah Opiyo


IN SUMMARY
The co-operatives should convert members to investors as well as educate them on using savings and debt to achieve goals and create wealth.

At a recent sacco AGM that I attended, I gathered that the sacco had a trend of sacking its officials every year whenever the dividend payout was declared.

This annual general meeting was not going to be different either. The dividend to be declared for the year would be lower than the previous year.

When the officials stood to read out the sacco performance, I gathered that although the sacco had an improved performance compared to the previous year, the number of borrowers was still insignificant compared to the number of members.

Consequently, the dividend payout declared was not pleasing to members hence they passed a resolution to sack and replace all the sacco officials and management.

Here are lessons for sacco members on how to enhance their dividends:

1. Convert sacco members to investors

A sacco with only members who are saving without borrowing can hardly earn any profit. Saccos only earn profits whenever members borrow and pay interest on loans.

It is from the profits earned that the dividends are paid out. This is a point that members need to be informed every time they join the sacco. Therefore, for saccos to boost their dividend payment, they should aim to convert all their members into investors.

Every time members gather for the AGM, they should be more focused on how much they have earned the sacco in form of interest on loans than the dividend they have earned the sacco.

Saccos should enhance the borrowing appetite of members by coming up with the investment opportunities that members can partake through loans borrowed from the sacco.

2. Rollout financial goal setting outreaches

Many people join saccos without clear financial goals on what they wish to do with their hard-earned contributions after a period of time.

Without financial goals, a sacco member exercises little control over the direction of their financial future, tending to impulse spend.

This explains why emergency loans are the most preferred form of credit facility in saccos. Due to the urge to spend, most sacco members without financial goals rush for these loans on the pretext of addressing an emergency.

To boost the saving spirit and the borrowing appetite, saccos should incorporate a financial goal setting programme as part of their members’ recruitment process.