The difference between SACCO share capital and deposits is that share capital represents your ownership in the SACCO, while deposits are your savings with the SACCO, which may help you qualify for loans.

For Soma SACCO Limited, here is a simple explanation you can also use to educate members.

1. Share Capital vs. Deposits

Share Capital

Share capital is the money a member contributes to own a portion of the SACCO. It makes the member a part-owner of the institution.

  • Represents ownership in the SACCO.

  • Usually has a minimum amount set by the SACCO.

  • Generally cannot be withdrawn like ordinary savings while you remain a member.

  • May earn dividends when declared and approved.

Member Deposits

Deposits are the money a member saves with the SACCO. They form part of the member’s savings balance and may be used to determine loan eligibility.

  • Encourage regular saving.

  • May be used to qualify for loans, depending on SACCO policy.

  • Often serve as security for loans.

  • Withdrawal is subject to the SACCO’s rules, loan obligations and applicable regulations.

2. A practical example

Suppose a Soma SACCO member has the following balances:

Account Amount
Share capital KSh 10,000
Member deposits KSh 50,000
Total KSh 60,000

The member has contributed KSh 10,000 towards ownership of the SACCO and saved KSh 50,000 in deposits. The two amounts serve different purposes and should be recorded separately.

3. The key differences at a glance

Feature Share capital Deposits
Main purpose Ownership Savings
Withdrawal Generally not withdrawable during membership Subject to SACCO rules
Returns May earn dividends May earn interest, if provided for
Loan eligibility Depends on SACCO policy Often used to determine borrowing limits
Risk Exposed to the SACCO’s financial performance Treatment depends on the deposit product and applicable protections

Important for Soma SACCO: Share capital and deposits should not be treated as interchangeable. The SACCO’s bylaws and approved policies determine the minimum share capital, deposit withdrawal conditions, dividend arrangements and loan eligibility requirements.

In simple terms: Share capital makes you an owner; deposits help you build your savings.