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Kenyan Savings and Credit Co-operative Societies (Saccos) are experiencing a shrinking market share in land and housing loans, despite an overall increase in the value of credit disbursed for these purposes.
Saccos in Kenya are witnessing a notable decline in their market share of loans allocated for land and housing, even as the total value of credit extended for these sectors continues to grow. Data from the Sacco Societies Regulatory Authority (SASRA) indicates a downward trend in the proportion of Sacco loans directed towards real estate, prompting discussions among stakeholders regarding its implications for public debate and policy execution.
The SASRA 2024 industry report reveals that loans disbursed for land and housing reached KSh 137.1 billion in 2024, an increase from KSh 126.1 billion in 2023. However, this figure constituted 25.26 percent of the total credit and advances issued by regulated Saccos in 2024, a decrease from 27.39 percent in 2023. This marks a continued decline from 33.24 percent in 2022.
Historically, Saccos have been pivotal in enabling Kenyans to access land and housing finance, particularly for low and middle-income earners, due to their member-friendly loan terms and often less stringent requirements compared to commercial banks. The Kenya National Bureau of Statistics (KNBS) Economic Survey 2025 highlighted that Saccos were the primary financial institutions for housing and land financing needs, accounting for 31.8 percent of the market. This was followed by housing finance institutions at 22.7 percent and microfinance institutions at 13.6 percent.
Many Saccos employ an incremental mortgage lending model, offering shorter-term credit facilities (typically three to five years), which allows for efficient liquidity management and risk mitigation. Some Saccos also proactively acquire and subdivide large land parcels, offering plots to members at affordable rates, and partner with developers for housing projects.
The diminishing market share for land and housing loans within Saccos appears to be influenced by a rising allocation of credit towards other sectors, notably agriculture. Loans directed to the agricultural sector increased to KSh 108.8 billion in 2024 from KSh 76.91 billion in 2023, with its proportion of total credit rising from 13.76 percent in 2022 to 20.05 percent in 2024. The education sector also remains a significant beneficiary, receiving KSh 119.49 billion in 2024, primarily for school and college fees.
Saccos in Kenya operate under a robust regulatory framework primarily governed by the Cooperative Societies Act and the Sacco Societies Act of 2008. The Sacco Societies Regulatory Authority (SASRA), established under the 2008 Act, is responsible for licensing, supervising, and regulating deposit-taking Saccos to safeguard members' interests and ensure financial stability. This framework includes prudential guidelines, capital adequacy requirements, risk management protocols, and consumer protection measures.
Analysts suggest that the observed shift in Sacco lending patterns could influence future public discourse and policy implementation. Stakeholders are calling for greater clarity on timelines, costs, and safeguards related to these developments. The decline in the real estate loan market share for Saccos occurs amidst a broader context where commercial banks continue to dominate the overall mortgage market. In 2023, the top seven banks held 80% of the total mortgage market, with KCB leading at 31%. The average mortgage rate in Kenya was 14.9% in 2024, with rates ranging from 12.0% to 18.6%, posing a significant barrier to homeownership.
The declining market share for Saccos in land and housing loans could impact their role in promoting affordable homeownership, especially if members seek alternative, potentially more expensive, financing options. It may also signal a strategic shift by Saccos towards other sectors, possibly driven by perceived lower risks or higher returns. The increase in non-performing mortgage loans across the broader financial sector, which surged to KSh 46.0 billion in 2024, indicates a challenging economic environment for borrowers and could influence lending appetites.
The specific reasons behind individual Saccos' decisions to reduce their proportion of land and housing loans are not fully detailed in the provided input. Further analysis would be needed to understand if this is a deliberate strategic pivot, a response to increased competition from other financial institutions, or a reaction to changing member demands.
Future SASRA reports will be crucial in monitoring whether this trend in Sacco lending for land and housing continues or stabilizes. Observing policy responses from the government and regulatory bodies, particularly concerning affordable housing initiatives and Sacco mandates, will also be important. The competitive landscape, including the strategies of commercial banks and microfinance institutions in the real estate sector, will continue to shape Sacco lending decisions.
