One of the pillars of becoming financially independent lies with investment. Whilst some of us are good at making investments, many of us have no clue or need prompting to stay on course. That’s where Chamas come into play. We are all familiar with Chamas, our mothers had them and we have grown up seeing ladies visiting each other and having a ‘merry-go-round’ where one lady gets the money from the Chama members each month. This money was used to improve your house or buy something.

But today, things are changing as people become more ambitious. Do you dream of investing in bigger things out of your reach? Then the Chama is the place to be as the old adage goes ‘Two are better than one’. What you can achieve as a group cannot compare to what you can do as a single person. To enjoy the benefits of a Chama, you can either join an existing group or start your own. Here, we shall discuss how you can go about starting your own Chama.

For starters a Chama is a group of members who come together to pool resources. So what are the first steps for forming a Chama? In order to create a successful Chama, Christine Mukuria of Bank of Africa gives some pearls of wisdom.

The first step you need to take is to talk to your friends, family or even colleagues and share with them your dream. What you want to achieve with the Chama. Once they show interest; “be choosy”. Advises Mukuria. Just make sure they are serious and you feel comfortable working with them. “The truth is, people often agree and illustrate interest but after a few months they drop out, so only accept serious and committed members.” She adds. Another aspect to look out for is the members have to be able to get along and of the same class, status and goals. Agree on common goals for the group. Members who are involved for social or educational reasons may not mix well with serious investors. “Many times, Chamas disintegrate due to huge differences between members who just can’t get along.” Says Mukuria. She also indicates that another mistake people make when forming Chamas is to ‘beg’ members to join. “Never do that.” She advises. When you cajole someone to join, he or she may join just to make you happy, but their heart is not in it. Somewhere down the line, they become resentful and eventually leave. Thus it is imperative to ensure that those joining actually buy the dream and they are serious investors in it for the long haul. Keep in mind that you can start a Chama with just a few members. Even three are enough. But of course the bigger the Chama the more potential it has.

Once you have a few people, you are now ready to take the next step. Invite them for the first meeting. The purpose of this meeting is to gauge the members and make sure that you share similar goals and to confirm the new members in the group. Next, should include election of officers such as treasurer, secretary and chairman. The agenda of this first meeting may also cover items such as choosing the group’s name and the compilation of a loose list of each member. Also, remember to list the necessary roles for operating the group such as a
Chairman to conduct meetings, Secretary to keep notes, Treasurer to deposit money and an investor to monitor investments. Remember to limit the amount of time each member will hold a particular role. This will diversify and enhance the experience of individual member.

The other thing to do is to agree on the level of money members will contribute every month. A large monthly contribution may eliminate members over the long run. Small investments may frustrate investors who want to commit large amounts of cash in hopes of seeing a larger return. A good rule of the thumb is to start small and grow. For instance you could start with a contribution of Kshs.2,000/- per month and slowly grow that figure with time as the Chama grows and gets established. So you must keep a balance so as to ensure everyone is happy.

After all documents are drawn and everyone agrees on them it’s time to make your Chama legal. You can register it with the Ministry of Gender and Social Services or you can opt to engage a lawyer and register a limited company.

Next, You need to open a bank account for the Chama. You will need your signatories present to open the account. They must carry their original ID cards to facilitate this. You may opt to pick two to three signatories to the account. Once the account is open the Chama can make its first deposit.

The other essential you need is to hold regular meetings. These are the most important part of the Chama; this is where the actual learning and knowledge sharing takes place. In your Chama agreement you should have indicated the frequency and purpose of meetings. You can choose to meet once a month or even once a week depending on your needs. The Chama secretary should send out email or sms reminders a few days before the meeting takes place.

Come to the meetings prepared, usually it’s a good idea to set aside about 30 minutes for socialization so that it does not interrupt the meetings. During the meetings you discuss your current holdings and any changes needed, you can present new purchase ideas or discuss
other relevant investment topics. Don’t forget to have fun. A Chama should be a place to create wealth and laughter.

Categorised in: Bank of Africa, chama constitution, chama management, Investment groups

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