Chamas: what you need to know about chamas in Kenya

WHAT YOU NEED TO KNOW ABOUT CHAMAS IN KENYA


In Kenya there are estimated to be 300,000 chamas which control up to a total of 300 billion (US$3.4) billion in asset. Before we continue lets first know what a chama is;
A Chama is an informal cooperative society that is normally used to pool and invest savings.
They are also referred to as micro savings groups. These chamas rose from the early harambee times in the late 80s and 90s. Originally chamas tended to be for women only. But after their growth and their huge success, men also opted to join them.
Today were going to answer some vital questions about chamas which we have carefully selected for your good as it is for us.

TYPES OF CHAMAS IN KENYA.
There are two types of chamas; group directed chamas and self-directedchamas.A few notes being held


  • GROUP DIRECTED CHAMAS
    In this type of chamas, members contribute in to a common pool and jointly invest the funds in a common investment or portfolio of investments. The returns from these investments are subsequently shared among the group members according to a pre-determined or dividend policy.

  • SELF-DIRECTED CHAMAS.
    These are chamas that meet and learn about investing, but members invest independently.
    There are no financial contributions towards investing and the primary objective of this type of chama is to get together and share ideas and experiences about investing, so as to gain tips on how one can invest his own funds. These are not very common; an example is where a group of farmers attend a field day to learn together.


WHY CHAMAS IN KENYA FAIL.

1. GAME WITH NO RULES.

Chamas that lacks rules is like a sailor without a compass. They ought to be and behave similar to disciplined forces. Most chamas have failed because they lack rules and regulations to play by. Simple rules like attendance, contributions and deadlines are very vital not just for chamas but any business to succeed. Chamas need a clear and strict set of rules that will guide its members. Also penalties for breaking of the rules should be clearly stated and adhere to fully.


2. MISTRUST among members
Trust and honest are the greatest of assets that every business thrives on. Most chamas fail because they lack trust first for the leaders and then among the members themselves. Every chama should ensure there is trust within them and if there isn’t by all means eliminated the threats of mistrust.

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