What are main differences between a Savings and Credit Co-Operative (SACCO) & an Investment Club?

An investment club is a self-managed group of people who meet on a regular basis to pool resources together and decide how to invest their resources. Each member may help make investment decisions.

SACCO is an abbreviation for Savings and Credit Co-Operative. It is a business organization owned and operated by a group of individuals for their mutual benefit.

The SACCOs lend to members only.

A SACCO is also a form of Investment Club constituted into a SACCO

Their fundamental goal is to offer saving plans and credit offices.

A SACCO on registration becomes a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold movable and immovable property of every description, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purpose of its constitution.

SACCOS

Savings and Credit Co-operative Societies have two or three main objectives;

Save

You can put money into a Sacco to just set aside your cash for future use. Members can use the saved cash to venture into profitable ventures.

Investments

Numerous SACCOs (multipurpose cooperatives) are permitted to put the cash saved into different investment activities.

Loans

The second most pivotal element of this investment is the capacity to borrow money. Standard credit features can go up from three to multiple times your investment funds. Members can access loans such as Emergency loans, school expenses advances, improvement advances, credit to improve their way of life.

SACCOS are mainly governed by their bylaws and the any other rules and regulations the members agree to at their Annual General Meeting .

Investment Clubs are mainly about investing and are rarely take part in acquiring credits. They contribute for a specific purpose or a specific period.

The investment club members are governed by a constitution which can or may be amended by the members by voting and minutes of a meeting agreeing to that effect.

Investment club members may decide to register their club as a company or partnership for purposes of joint ownership of the assets and liabilities of the club.

An investment club is not a legally recognized independent body and therefore cannot own any assets in its name.

Standard/uniform contributions for investment clubs unlike SACCOS where members buy shares and save according to their respective ability as long as a single member does not own more than a third of the total shares or savings.

Numbers; mandatory requirement for SACCO is at least 30 people. Investment clubs have no mandatory requirements for numbers.

Regulation; SACCOS regulated by Ministry of Trade. Investment clubs regulated according to investment activity. For instance may be regulated by UMRA if it ventures into money lending