Sacco Times

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Meet Kwara, the digital platform powering Kenya’s cooperative savings and credit sector

7 min read

Kwara aims to digitize SACCOs (Savings and Credit Cooperatives, also known as Credit Unions) and other Non-Bank Financial Institutions (NBFIs) to amplify people’s existing financial habits and increase usage of diverse financial services among the underserved, starting in Kenya. Their banking platform-as-a-service and credit scoring capabilities enable SACCOs to connect to the formal financial system, bring their operations online and reduce fraud, and provide SACCO members with access to banks and ATMs. As a result, these groups can offer safer, faster, and more diverse financial services to underserved populations via an institution they already know, trust, and use.

Kwara’s solution supercharges a tech-enabled savings culture, which can serve as the foundation for a strong financial ecosystem, from which people can obtain affordable loans and build their credit profiles and credit scores. It directly links the informal and formal financial sectors, enabling underserved customers to access the formal banking infrastructure such as ATM networks, credit bureaus, digital transactions, and more.

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  • Impact: Catalyst Fund startups deliver (or, in the case of B2B firms, facilitate the delivery) of life-changing products and services to underserved populations. These can include financial services like loans, savings, insurance, and investment, but also access to productive inputs or essential services such as energy, sanitation, and water.
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  • Growth potential: Catalyst Fund startups are distinctively investment worthy, developing businesses that are scalable, with high growth potential. Our startups are selected by an Investor Advisory Committee, who have deep experience in emerging markets and nominate high-potential startups, and then sponsor and mentor them through Catalyst Fund. As a result, our startups raise more funding than startups from other accelerators.


With over 15,000 registered societies and unions, co-operative financial institutions in Kenya play a critical role for financial inclusion among underserved communities. Kenya’s cooperatives are comprised of more than 10 million members, and they collectively control savings of KSh 501 billion (US$ 4.7 billion) and an asset base of KSh 694 billion (US$ 6.54 billion). In 2017, they contributed 5.72% of Kenya’s nominal GDP. 

One key reason for their popularity among low-income, underbanked populations is that these institutions offer better returns on savings than mainstream banks, as well as loans at more affordable interest rates. They are able to intermediate member savings to offer more attractive products and also offer options for social collateral and personalized financial support. They play a vital role in improving the overall financial health of the members they serve.

They are, however, often excluded from the digital financial sector and rely on manual operations and processes, resulting in inefficient operations, challenges with liquidity, and lack of proper data analysis. Fraud is also prevalent among SACCOs because, due to their informal nature, they sometimes lack proper regulation and vetting, and effective means of fraud detection.

When these institutions are not able to meet members’ needs, members often turn to loan sharks and other sources of capital, which can mean higher interest rates and unscrupulous repayment methods. 

Kwara’s platform aims to make SACCOs more transparent, secure and investible in terms of operations, while also enabling improved services for members in terms of more, better, and faster services, as well as access to digital products. Their ultimate goal is to improve the overall financial health of the members.


Kwara offers an affordable digital platform that enables cooperative financial institutions to acquire and retain more members, secure their members’ funds, and increase their revenue. Members in turn receive a more convenient experience, increased transparency and more complete credit profiles.

In all, the service enables SACCOs to control and approve loans more effectively, while building and tracking individual credit scores and personal finance – which members can often access for the first time. This leads to better control over individual finances, and better access to fair loans.

SACCOs have an established working culture as well as operational processes and habits. In such an environment, any pain point or obstacle to usage that feels more difficult, less clear, or less intuitive to users may cause them to return to older existing practices, no matter how burdensome. After all, habits are hard to break.

As such, Kwara’s challenge is to create a solution that disrupts these practices, but in a way that feels easy, seamless, and valuable. Kwara has deeply understood the methods and ways of operating in SACCOs to carefully construct a solution and user experience that matches the mental maps and intuition that exists within the organizations. The team is continuously adjusting and refining the solution to ensure it meets users’ needs.

Growth Potential

As of 2017, 35% of Kenyans  utilized informal financial services – and this number continues to grow. Connecting these entities to the formal financial sector can result in increased accessibility and greater affordability for all stakeholders.

The Kwara team plans to expand its offering beyond Kenya, into additional emerging markets like Indonesia – where many rely on informal rotating savings groups, such as arisans – and the Philippines, where microfinance, savings groups, and non-bank financial institutions have long played a critical role in bringing crucial financial services to the underserved. In Indonesia, as of 2016, 22% of adults had used an arisan, and 11% had used a microfinance institution (MFI), making these the preferred financial services provider for the unbanked or underserved. 

Non-bank financial institutions in these and other emerging markets around the world face similar challenges related to lack of digitization and structure, prevalence of fraud, and lack of data access for members. However, there is a significant opportunity for Kwara’s platform to enable these groups to improve their services, amplify their customers’ behaviors, and further inclusion so as to increase overall financial health among their members.

Weak internal capabilities

Although the Kwara solution can be bought off the shelf, SACCOs often lack the internal resources needed to adopt new tools, from getting the system up and running to importing existing records, to training field staff, to troubleshooting implementation issues. As such, they tend to depend on external support from vendors, which can be highly tedious and expensive. Moreover, this reliance on vendors keeps them from identifying and trying new solutions as vendors promote the solutions they already know and use. 

Kwara offers high-touch user support, especially during the first six months of transition to ensure that the SACCO’s team feels confident using and adjusting to the system.  Kwara holds the hands of their clients through the onboarding and data migration phase through training, video demos and calls to ensure a smooth integration, and are subsequently available around the clock to support their clients. The team even handles data clean up and can provide specialized accounting support to set up a Chart of Accounts for smaller SACCOs unaccustomed to such systems.

Kwara’s support includes a Fast Learners Program to certify staff in Kwara proficiency via regular training, assignments and refresher courses that build skills and confidence among staff. One participant noted, “”The assignments are straightforward, challenging and informative. Learnings from this program are immediately applicable in my daily work, as the program is tailor-made to my role!”

The Kwara team is also developing a longer-term solution for customer support and success by laying the foundation for an entry-level training program that is completely focused on customer support, onboarding and engagement. This program creates a pipeline of future talent among young professionals. This customer support means that SACCOs have direct access to the help they need through Kwara’s team of experts, instead of needing to hire unvetted, expensive vendors. The added benefit is that SACCOs can not only troubleshoot issues, but also expand their usage of the system.

Bad experiences with other digital solutions

Many SACCOs are reluctant to try new digital solutions because they have had poor experiences with similar products in the past. For example, one CTO told us that their system tended to crash when too many staff members were using it at once. Others complained about lack of integrations.

Kwara’s system is completely cloud-based, thus, server crashes and lost work is not an issue. One of the biggest benefits of Kwara’s system is the ability to integrate with other software, so Kwara can seamlessly connect with the core banking system, CRM, etc. (if they have one already) and already has a built-in EDMS. Furthermore, Kwara has started some integrations with frequently-requested complementary systems like payment gateways (e.g., PesaLink, MPesa), advanced reporting, remittance services (e.g. Transferwise) and fraud reporting so that clients can easily add additional software without needing to figure out the integration themselves. 

Concerns about cyber security

SACCOs worry that an all-digital system — without a paper back up — is vulnerable to cyber attacks, and they are therefore reluctant to make this shift. This concern is not ungrounded, as one CTO noted, “Our staff cannot work from home because our current system is prone to cyber crime. We have noticed several cyber crime attempts on our firewall.” 

Kwara’s cloud-based servers provide “military-grade security” to help SACCOs protect themselves against these threats. Many SACCOs do not understand the security of a cloud-based system, so the team has revamped communication efforts around security to highlight the integrated system controls and data privacy measures. Furthermore, Kwara has received prominent certifications for compliance with strict security standards.