What is a SACCO dividend?

A share of the SACCO's annual profit paid to members on their paid-up share capital. Declared at the Annual General Meeting (AGM) as a percentage of paid-up shares, expressed per year.

How is that different from interest on deposits?

Interest on deposits is paid on your BOSA and FOSA savings, not on your shares. It is more like a bank savings interest rate. Both are declared at the AGM but they are calculated on different balances.

When are SACCO dividends paid?

After the AGM, typically March or April, once the previous financial year's audited accounts are approved by members. The declared amount is credited to your member account and can usually be withdrawn or reinvested.

Are SACCO dividends taxed?

Yes. Both share dividends and deposit interest declared by SACCOs are subject to withholding tax at the source. The SACCO deducts before paying. Confirm the current rate with a tax advisor or KRA.

How is the dividend calculated?

The board and management propose a dividend rate to the AGM, based on the year's profit, prudential reserve requirements set by SASRA, and the SACCO's by-laws on reserves and dividend limits. Members approve or amend by vote.

SACCO dividend explained Kenya 2026: shares, deposits, AGM

The distinction that trips most people up

Kenyan SACCOs pay two separate annual amounts, not one. This is different from a commercial bank (which just pays deposit interest) and different from a listed company (which just pays a share dividend). It matters because your total return in a year is the sum of the two.

Dividend on share capital. Paid on your paid-up shares. Declared as a percentage of shares held. Example: 10 percent dividend on KES 30,000 of paid-up shares = KES 3,000 gross.
Interest on deposits. Paid on your BOSA (Back Office) and FOSA (Front Office) savings balances. Declared as a percentage of the average or year-end balance, depending on the SACCO's by-laws. Example: 8 percent interest on an average KES 200,000 balance = KES 16,000 gross.

Combined gross return in this example: KES 19,000 on a KES 230,000 stake, roughly 8.3 percent gross before tax.

How the rate is decided

Financial year runs January to December for most Kenyan DT-SACCOs.
External auditor completes the audit (typically January to March).
Board reviews the audit, checks reserve requirements under the SACCO Societies Act 2008 and the SACCO Societies (Deposit Taking) Regulations 2010, and proposes a dividend and interest rate.
AGM notice with the proposed rates goes out to members.
Members vote at the AGM (one member, one vote).
Approved rate is applied to each member's balance and credited to their account.

Reserves come first (the reason your rate might feel low)

Before dividend and interest are declared, SASRA prudential rules require the SACCO to transfer a portion of profit to statutory and other reserves. This protects the SACCO's solvency and keeps the Deposit Guarantee Fund's exposure in check. In a strong year the reserve requirement takes a bite; in a poor year, the SACCO may declare a lower rate or, occasionally, no dividend at all.

This is a feature not a bug. Members whose SACCOs have consistently strong reserves are better protected than members whose SACCOs pay out every shilling.

Withholding tax

Both share dividends and deposit interest declared by SACCOs are subject to withholding tax under the Income Tax Act. The SACCO deducts the tax at source and remits to KRA; you receive the net amount and a tax certificate that you can use in your annual return.

The specific WHT rate applied to SACCO dividends and deposit interest has changed over the years. Confirm the current rate with a tax advisor or by checking the current Income Tax (Withholding Tax) Rules with KRA before relying on any specific figure.

Reinvest or take cash?

Cash to FOSA / M-PESA. Useful if you need liquidity. Least strategic, most flexible.
Add to share capital. Increases your future dividend base, but ties up the money (share capital withdrawal typically requires 60-90 days notice and incoming replacement members).
Add to deposits. Middle ground. Increases your interest-earning balance and the loan multiplier, remains withdrawable subject to guarantor commitments.

What if the SACCO does not declare a dividend?

It happens. A SACCO can post a loss (rare but not unknown), or the board can propose zero dividend to rebuild reserves. Members can reject the proposal at the AGM and push for a different outcome, but the AGM cannot legally declare more than the audited profit and the SASRA reserve rules allow.

If a SACCO consistently under-declares dividends despite reporting healthy profits, that is a governance red flag. Read the audited financials, attend the AGM, and ask questions.

How to verify what your SACCO paid

Ask the SACCO for the current-year AGM circular. Members are entitled to this document.
Cross-check the number against the audited accounts (also in the AGM pack).
For industry context, see the SASRA SACCO Supervision Annual Reports at sasra.go.ke/sacco-supervision-reports. These give you industry averages you can compare your SACCO's declared rate against.

Sources

SACCO Societies Act No. 14 of 2008 (as amended), particularly the provisions on annual audits, statutory reserves, and dividend limits.
SACCO Societies (Deposit Taking) Regulations 2010.
SASRA SACCO Supervision Annual Reports, sasra.go.ke/sacco-supervision-reports, accessed 26 August 2026. Industry averages for share dividends and deposit interest cited here draw on the supervisory reports.
Income Tax Act, Withholding Tax provisions. Confirm the current rate with KRA or a tax advisor before relying on any specific figure. Marked unverified where a specific rate figure is not cited to the current KRA schedule.