Interest on Deposits vs. Dividends in Kenya: Which Earns More in 2026?

Every SACCO member has two "pots" of money: Deposits (your savings) and Share Capital (your ownership). While both earn a return, they are treated differently by both your SACCO and the Kenya Revenue Authority (KRA).

1. Interest on Deposits (Rebates)

This is the "rent" the SACCO pays you for using your monthly savings to lend to other members.

• The Multiplier Effect: In 2026, your deposits are your ticket to credit. Most top SACCOs like Stima and Kenya Police allow you to borrow up to 3x or 4x your deposit balance.

• Liquidity: These funds are refundable when you leave the SACCO (subject to a notice period, usually 60 days).

• 2026 Rates: Typically range between 8% and 13%.

2. Dividends on Share Capital

This is your slice of the SACCO’s annual profit. Because shares represent permanent ownership, the risk is higher, and therefore the reward is usually much greater.

• Permanence: Shares are non-refundable. You cannot "withdraw" them; you can only transfer or sell them to someone else on a platform like Saccoshares.

• The "Profit Engine": Shares do not help you get loans, but they are your highest-yielding asset.

• 2026 Rates: Industry leaders like Tower SACCO are currently paying as high as 20%.

3. The Tax Advantage: Why Dividends Win

One of the most overlooked aspects of SACCO investing in 2026 is the Withholding Tax (WHT). In Kenya, SACCO returns are taxed at the source, but the rates differ:

The Impact: Not only do shares generally have a higher percentage rate (e.g., 20% vs 13%), but you also keep more of that money because the government takes a smaller cut of dividends compared to interest.

4. 2026 Data Comparison: Tower vs. Stima vs. Police

Let’s look at the actual 2026 payouts from the "Big 3" to see the "Spread" (the difference between interest and dividends).

5. Strategic Move: Capitalizing Your Returns

In 2026, many savvy investors are using a strategy called "Dividend Capitalization." Instead of taking your 20% dividend in cash, you instruct the SACCO to move that money into your Share Capital.

• Why do this? It grows your ownership stake without you touching your salary.

• The Saccoshares Benefit: If you ever need to turn that capitalized wealth into cash, you can simply list those shares for sale on our marketplace.