What is Liquidity (SACCO)?
Liquidity is a SACCO's ability to meet its obligations as they fall due: member withdrawals from a front office, loan disbursements already committed, and operating costs. Regulated SACCOs are subject to minimum liquidity requirements set in the applicable regulations, and report their position periodically.
A real Kenyan example
A SACCO that has lent out a very high proportion of its deposits may be profitable on paper and still unable to meet a run of withdrawal requests, which is a liquidity problem rather than a solvency one.
Why it matters
Liquidity and profitability are different things, and institutions fail on liquidity while still solvent. For a member, liquidity is what determines whether a withdrawal request is met this week or next month.
FAQs
What liquidity ratio must a SACCO hold?
Minimum requirements are set in the regulations made under the Sacco Societies Act and are revised. Confirm the current requirement with SASRA rather than relying on a published figure.
Can a SACCO be profitable and still have a liquidity problem?
Yes. Profit is measured over a period; liquidity is about having cash available when obligations fall due. A SACCO with too much lent out for too long can be profitable and illiquid at the same time.
Why was my withdrawal delayed?
It can be a liquidity matter, a notice requirement on the specific balance, or a hold related to a loan or guarantee. Ask the SACCO which of these applies, since they have different remedies.