Understanding SACCO Dividends, Rebates, and Deductions (East Akiba SACCO Guide)

Being a member of East Akiba SACCO comes with real financial benefits. Two of the main benefits are dividends and rebates. In this guide, we explain what they are, how they are calculated, and the deductions involved—using simple, easy-to-understand examples.
1. Dividends (On your Shares)
Dividends are paid on your Share Capital (the permanent money you use to join). Since this amount is usually stable throughout the year, the calculation is straightforward.
• Typical Rate: 11% – 12%
2. Rebates (On your Deposits – "Pro-rata")
Rebates (Interest on Deposits) are paid on your Monthly Savings. We use a pro-rata calculation, which means you earn interest on your money based on the number of months it has been with us.
• The Logic: Shillings saved in January earn interest for 12 months. Shillings saved in December only earn interest for 1 month.
• 2025 Rate: 5.5%

3. The Deductions
Before the money is credited to you, we apply two standard deductions:
1. Withholding Tax (5%): A mandatory government tax.
2. Processing Fee (0.75%): An administrative fee (Minimum Ksh 15).

A Realistic Example
Let’s look at a member who has Ksh 20,000 in Share Capital and ended the year with Ksh 100,000 in deposits by saving consistently.

Step 1: Calculate Dividend (Flat Rate)
• Ksh 20,000 (Share Capital) × 12% = Ksh 2,400

Step 2: Calculate Rebates (Pro-rata)
Because the member added money every month, they don't earn 5.5% on the full 100,000 for the whole year. Instead, we calculate the Weighted Average of their savings.
• If this member saved monthly, their "earning balance" might average out to roughly Ksh 60,000.
• Ksh 60,000 (Average Balance) × 5.5% = Ksh 3,300

Total Gross Earnings: 2,400 + 3,300 = Ksh 5,700


Step 3: Deduct Tax and Fees
• Withholding Tax (5%): 5% of 5,700 = Ksh 285
• Processing Fee (0.75%): 0.75% of 5,700 = Ksh 42.75

Step 4: Your Net Take-Home
• Total Deductions: 285 + 42.75 = Ksh 327.75
• Net Payment to Member: Ksh 5,372.25

The Conclusion
The earlier in the year you make large deposits, the more they earn! By saving consistently from January, you maximize your "pro-rata" interest.
East Akiba Sacco –Together we Succeed.