What a SACCO Liquidity Ratio Means for Members

A SACCO can be profitable on paper and still struggle to pay cash today. Liquidity measures whether the institution has enough liquid assets to meet short-term obligations. SASRA reported an aggregate DT-SACCO liquidity ratio of 61.34% in 2024.

Liquid does not mean profitable

Loans may earn interest, but they cannot be turned into cash immediately without repayment. Buildings and equipment are also assets, yet they cannot fund a member withdrawal tomorrow morning. Liquid assets include cash and instruments that can be converted quickly.

Why the ratio matters

Members expect approved loans, FOSA withdrawals and exit refunds to be paid. When liquidity is tight, the SACCO may delay disbursements, borrow externally, sell investments or intensify deposit mobilisation.

How to read 61.34%

The sector figure was above the prescribed minimum for DT-SACCOs, but it is an average. Some institutions sit comfortably above it and others may be close to or below requirements. Check the individual SACCO’s ratio and trend.

What can weaken liquidity

Rapid loan growth, high member exits, non-remitted payroll deductions, loan defaults and poorly timed investments can reduce available cash. A high dividend payout can also leave less retained cash if it is not supported by strong operations.

Member questions

Has the ratio fallen for several years? Are external borrowings rising? How long do refunds and approved loans take? Does the SACCO depend heavily on one employer’s deductions? These practical signs help test the reported figure.

Bottom line

Liquidity is the difference between owning valuable assets and having cash when members ask for it.

Editorial note: Use the individual SACCO’s audited liquidity ratio and recent service record.