September 13, 2012   by

Becoming an Investment group

We have tackled a lot on the investment packages being offered by several of our commercial banks. But before a group can go the lengths of savings up to an investment, it is very important to carry out due diligence and sort of ”put your act together’

Chamas, Go big!

Transforming from Merry go round to Investment group

 Since many people are already in a social group for one reason or another, it is advisable to upgrade the existing Chama into an investment club instead of forming a new group.This is because old groups have gone through the teething problems associated with new associations and members are well acquainted with each other. With years of helping each other in merry go rounds or social welfare groups, this groups can easily graduate into investment clubs. This ‘upgrade’ has an advantage of having previous financial interaction enabling members to know how each other can commit financially, credit worthiness or even their levels of commitment to responsibility.

Blossom into a Big Group!

Remember to keep off family and close relatives in an investment club as they may bring along some vested interests. However, its also important to note some social based groups have at times done very well.

Key steps in Becoming an Investment group

In case you want to form a new investment club it is advisable to bring together comrades with common interests, for instance minded workmates, friends or business associates.

Make decision on Membership

A club should decide on how many members they want on board and whether or not additions members can be incorporated made along the way.

Get a Chama Constitution

Once a Chama has been formed, the next step should be drafting a constitution which should define the rules of the game. All members must agree on the terms and conditions of the constitution and must be ready to comply with it.  To be on the safe side  tackle various issues as  may arise in the draft copy and also sample  copies of  constitutions from other groups before making the final draft. To make it formal ,the constitution document should be written down with each member being given a copy of the same.

It serves more purpose than laying the rules as it is also demanded by government authorities during registration and the bankers while opening an investment group account.

Choose your Leaders, Wisely 🙂

The next step should be assigning of responsibilities to officials who run the club  on behalf of the members. Their duties responsibilities should be well spelt out and agreed upon by all members. They may include but not restricted to the chairman, the secretary, treasurer among other offices that members agree upon.

Choosing office bearers may also involve and include creating several committees, eg Investment committees, finance committee and even welfare committees. These again may also have a  leader, who may or may not be a part of the group officials.

Become Legit

With the like minded members in place,  a constitution and  office bearers agreed upon, the group can move on to seek legal documentation. There are several options available to register a group either as welfare or social group, community based organisation, partnership or a business. Group members depending on the size, financial muscule, or  group investment plan can make a decision on which option to go for. Small groups may register with the department of the social services while big investment groups may decide to register a company with the registrar of businesses.

Of course, make sure you also engage a lawyer during the registration process for more advice. An accountant or Auditor may also be a useful resource since he/she will advise on the what will be the best structure for your group, based on your investment and financial objectives.

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This post was written by Martin Njuguna

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20 Comments

    susan wairimu
    on June 19, 2013, 4:44 PM

    please tel me more about mery go rounds.i want to start one and i dont know how.can u please give me detailed information


    Martin Njuguna
    on August 29, 2013, 5:00 PM

    Hi susan,

    Thanks for the feedback.

    We dont dont have alot of information on Merry go rounds. However, from what I have seen personally, merry go rounds start when friends or a group of extended family members decide to start contributing together for a cause or savings , as to how the different chamas work, I guess most of them will have their own ‘internal rules’


    ruth
    on September 18, 2013, 8:16 AM

    is there a way i can guarantee limited liability in the group,and how can i register the chama in Kenya today,and is there a site that i can find a good drafted constitution


    judy mwangi
    on December 17, 2013, 2:54 PM

    hi help me with a draft constitution of an investment group


    andren
    on April 12, 2014, 9:27 AM

    how much does it cost to register an investment group?any taxes involved when starting?


      Martin Njuguna
      on June 27, 2014, 6:42 AM

      Dear Andren

      Thanks for the comment. You can register your investment group in many ways. You can register a parnership, a limited liability company or just proceed with no registration but open a joint bank account. So the cost depends on the form of registration.


    Jeremiah Gachora
    on April 22, 2015, 12:36 PM

    Whats the difference between a welfare and self help group


      Martin Njuguna
      on April 22, 2015, 12:51 PM

      Welfare and self help groups are very similar. Both groups focus on improving the well being of their members and they may or may not include the element of providing loans to members


    EBE
    on July 9, 2015, 4:08 PM

    very helpful. thanks


    Barbara
    on August 20, 2015, 8:34 AM

    Hi Martin,
    Would like to know more about self help groups,
    what are the requirements to start one. How can i get help to start one?


    lynn
    on October 1, 2015, 2:34 PM

    how do a merrygoround work


    steve
    on January 18, 2016, 11:38 AM

    would like to know the requirements of learning a chama .


    susan
    on July 18, 2016, 12:11 PM

    What does wellfair consist.we have a wellfair and our aim was in times of death we can be able to help.but now the hole thing has changed it has now become a borrowing chama.pliz help me to know what a death wellfair consist of.


      Anne Oyoo
      on July 18, 2016, 12:51 PM

      Afternoon Susan,
      The status of a welfare depends on the constitution that members have agreed upon. ChamaSoft is a book keeping tool and will help in record keeping of all the contributions made.
      you can get more information from http://www.chamasoft.com/ or from our support team Tel:+254-733-366-240


    susan
    on July 18, 2016, 12:21 PM

    Want to start a wellfair group not a chama or a borrowing group.we are already 30.contribution per month is 30k.how can we run it?


      Anne Oyoo
      on July 18, 2016, 12:43 PM

      Afternoon Susan,
      on our Chama soft portal we have a platform with a detailed panel which will assist you to capture your contribution.
      Kindly contact our support team on +254-733-366-240 for more details.


    Lizy Musiomi
    on November 8, 2017, 4:32 PM

    Looking for members whom we can start a Merrie go round 10k per month if interested sms me 0711717652


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