Saving mobilization

The reason for saving, challenges of saving money. Funds mobilization is one of the challenges in a co-operative society. Security of savings in a co-operative society is paramount.

1. SAVING MOBILIZATION Co-operative Officer Stephen Mwangi .

2. Saving is sacrificing current consumption so as to increase the availability of resources for future consumption (needs). It is the part of a member’s income that has not been spent but rather stored for future use or invested in Income Generating Activities so that it can earn more income in the future . Definition of Savings

3. Savings is the practise of building large lump sums of money out of small and often irregular and fluctuating incomes scarcely big enough to cover the individual’s most basic needs. Saving is a discipline and requires sacrificing in addition to planning. It is a discipline because it teaches people to use their resources in a wise manner and sparingly to develop an asset in the future. Definition of Savings

4. It is a sacrifice because it teaches people to lower today’s expenses and to withhold valuable resource for future needs instead of consuming immediately. Saving involves planning for tomorrow (future), because people need to forecast and prepare for possible risks and emergencies like bad harvest, sickness and death. It also teaches people to think on starting a new business or expanding existing ones and also teaches people to anticipate and prepare for events and expenditures like school fees, marriage, old age and retirements. Definition of Savings

5. a) Smoothening the household cash flow; b) Accumulation of wealth; c) Saving for future investment ; Households may not be able to have sufficient capital to start an Income Generating Activity (IGA). They may therefore commence saving small amounts of money until the required capital is raised. d) Means of insurance ; Savings play the role of insurance against income losses, emergencies, bad weather and sickness in the family that may occur in the future. Reasons for Saving

6. 1. Safety and confidence: Savers need to be confident that when they place their savings, the funds will be safe and will not be lost through fraud or miss-used. 2. Accessibility to funds: SACCOs should properly manage its liquidity. The members should access their funds as and when needed. The factors that determine a member’s decision to save with the SACCO

7. 3. Interest to savers: The higher the interest paid on members’ savings, the more they are encouraged to save and the lower the interest, the less they are encouraged to save. The SACCOs should therefore offer its members good interest on their savings to encourage them to save with the SACCO as opposed to using other informal methods. 4. Cost to saver: Most members would rather not incur any costs on their savings since they are just saving. When the costs charged on the savings products are high it demotivates the members from saving. The factors that determine a member’s decision to save with the SACCO

8. 5. Appeal of product / service to different market segments: Majority of the members will save if the product is appealing to them. The factors that determine a member’s decision to save with the SACCO

9. Lack of or inadequate interest paid to savings: People see no reason as to why they should save because there is either no interest or very little interest paid to their savings hence this discourages them from saving. Increasing debts: Many people have accumulated many debts because of the ever increasing inflation and poor spending cultures hence they always end up paying debts and borrowing more in order to save. Prioritize saving: In most cases many people see no need to save since to them it’s not a priority as they have other basic needs to attend to. Some of the challenges hindering Savings

10. Little to save: People don’t save because they have very little money and spend a lot hence there is nothing left to save in most cases. On the other hand, some people believe that it is those with a lot of money who save so the ones with little have no business in saving. Don't want to deal with banks: Most people do not save because they do not desire to deal with banks. This is because banks have a lot of bureaucracy which pushes them away from saving and they end up spending the money or keeping it in unsafe places. Some of the challenges hindering Savings

11. 1. Time minimization, cost of transport minimization, risk minimization: 2. Wealth accumulation, Building Collateral and Guarantors for loan: Members who save with the SACCOs can use the loans they get to invest in different business or even expand their current businesses which in turn increase their profits thus accumulating their wealth. SACCO members are also able to get loans from larger MFIs and commercial banks since the SACCOs are in most cases willing to act as guarantors for getting loans. Advantages of Savings with the SACCOs

12. 3. Building easily accessible financial institution, i.e. safe place for savings and loan within his/her village. 4. Building bargaining power to negotiate with financial institutions to get long term investment loans. Members of SACCOs are able to negotiate with financial institutions if they need loans. This is because the SACCO guarantees the loan purpose and most SACCOs further invest in different IGAs which seek to improve on the members’ financial incomes. Advantages of Savings with the SACCOs

13. 5. Education and training on how to utilize his/her resources in a wise manner that increases their income. SACCOs carry out trainings and educate the members on how best they should spend their savings so that they can be able to reap more from their savings. 6. Get interest and dividend on their savings and share: SACCO members are entitled to get dividends for holding shares within the SACCOs as well as interest since their savings are given to people as loans hence this improves on their household incomes . Advantages of Savings with the SACCOs

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