September 16, 2013   by

images (4)Most of us are familiar with merry-go-round chamas as our mothers had them and we have also participated in one at one time or another.  These chamas are usually based on social reasons.  A group of friends decide that they can meet for a cup of tea or a meal every month to chat and in the process also save some money which is given to one member every time, thus the merry-go-round theme.  Josphine Mecha of Gracious Mums chama, a successful merry-go-round chama shares some ideas.

Merry-go-round chamas are the most basic and common form of chamas.  Members meet weekly, monthly or even quarterly to contribute to the chama savings plan. The chama is also an excuse for friends to gather and bond.  Many of these chamas involve meetings in one of the members’ homes, where she invites them for tea or lunch.  These chama meetings have a very informal set up, as members can come to the meeting with their spouses, children and simply enjoy the meal and have fun with the other friends.  Things only get down to business at the end when members are leaving where they pool their savings and give it on the host.  And the cycle repeats itself until all the members have received cash.

Many people are comfortable with this type of chama as it is fun, they get to bond with their friends and they also get to save and get the money in a lump sum after several months.  People use this money to buy household goods, pay school fees, buy new clothes, etc.  This type of chama works very well for people who are just starting out with chamas and also for those with a social outlook.  Also, it can work well for people who know each other well such as colleagues, neighbours or even family members.  The only drawback is that you cannot do major things like invest in land, real estate or even shares as all the pooled money is consumed by members every time and there is no bank account.

Have you been thinking of starting a merry-go-round chama with your friends?  Well, as you can see it has a very basic set up and it is very easy to start and operate.  The most important thing to consider is the membership.  Ten to 12 members is a manageable number. This is a big enough group for people to help and encourage each other without being so big that people feel overwhelmed. Members should have similar savings goals and they should know each other well.

Next, decide on a monthly savings amount.  Keep in mind that the amount should be based on what everyone is capable of contributing.  Individuals are required to bring their savings contributions to meetings as determined by the group.  Set a schedule for members to host the meetings in their homes until one cycle is over.  Also, decide how much money will be reasonable for the host to get from the chama when hosting the meeting, keeping in mind the cost of refreshments.  That should also determine how much members contribute during each meeting.  For example, if the members of your chama feel that Kshs.15, 000 would be a good figure for the host member to get; each individual will pay Kshs.1, 500 at each monthly meeting if you have 10 members. The money will be paid out to the host at the end of the meeting.   So as not to create resentment in this type of chama, establish a system for contributing if a member is unable to attend the meeting.  For instance, they can send their contribution through M-pesa.

Don’t forget to ensure that there is a chama membership agreement. The agreement should be specific, listing a member’s name, address and the agreed-upon monthly savings amount.


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