August 23, 2013   by

By Maryann Zita

As a Chama, did you know that you can achieve your dreams faster than you imagined? In this article, I will show you exactly where you can borrow up to 9 times what you have saved as an investment group, in as little as six months from when you start saving. Or, you can even get this money instantly into your Chama’s account.

Rafiki Micro Finance

You can get this from Rafiki which is a Deposit Taking Microfinance Institution that is also a subsidiary of Chase Bank. They have a savings product for Chamas that allows you to borrow up to 9 times your savings. For instance if you have saved Kshs.100,000 you are able to borrow Kshs.900,000.

Moreover, it is very easy to access this facility. Any Chama can get it. Including yours. We spoke to Tom Tula, Senior Business Development Officer, Rafiki DTM the only bank in Kenya with this facility. He shed some light on this.

According to Tula, any Chama which can comprise of at least three people can open a savings account where they put in their savings. He says that for new people who have just formed a group, it is a good idea to take their time to get to know each other for at least six months through savings, meetings and interaction before taking a loan. After that period, the Chama can go ahead and apply for the loan.

So what can a Chama expect to pay as interest for the loan? Tula says that the interest charged on the loan depends on what it will be used for. If the loan will be used to buy property such as a piece of land and construction interest is 19.5%. This applies for loans taken to purchase assets such motor vehicles. For commercial buildings the interest is slightly lower at 18% on reducing balance. For regular loan that is shared among members or used for other purposes the interest stands at 19.5%

Another advantage the Chama gets is that they can use their savings a security for the loan while earning interest as well. If they choose to put their savings in the fixed deposit account, the Chama can earn attractive interest of from 3% to 10%. “The interest you earn on your savings depends on your negotiating skills with the bank.” Says Tula.
Besides their savings, Chamas can also use a piece of land as security. However, this would mean that they would take up to one month to have their loan processed. The bank needs to take time to do due diligence, especially when it comes to land. They have to be sure that everything is in order before they disburse the loan to the members.

For well established Chamas that have been saving elsewhere and want to access this amazing loan facility; all they need is to open an account, and present a six-month bank statement from their previous bank. This allows the bank to access their saving habit thus they are able to access this loan instantly.

In order to open a Chama account at Rafiki, Chamas must be registered and possess a constitution that guides their activities. Chamas can save and borrow as much as they need up to Kshs.200 million. However, Tula is quick to point out that they also work with unregistered Chamas as well who are placed under one umbrella with other unregistered members to form a large company.

Chama members remain protected from the rigours of sudden exit of members through the constitution. “The bank recognizes the Chama as a company – which is a separate entity from the members thus should one of them leave, it does not affect the business. Things go on as usual as the other members remaining continue remitting the loan repayment.” Says Tula.

“For Chamas to make the most of this amazing facility, it is paramount to have trust among members, commitment, harmony, and focus on one goal and avoid bringing emotions into the Chama management.” Advises Tula.

With this, you can achieve your goals faster than you every imagined. Save little, get more. Certainly as a Chama, you have much to gain from this type of loan facility.
Think about it for a moment.

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This post was written by Chamasoft

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    on October 11, 2013, 3:35 PM

    I like your services.congrats! Anyway i wish to start saving with you but my worry is whether i will get a loan without being in a group after saving for six months or so.
    Keep up the good work!

      Martin Njuguna
      on October 15, 2013, 11:27 AM

      HI Lucy
      Thanks for the comment, we only provide a software that allows chamas to become more effective and efficient,we don’t provide loans but you can review the various chama articles we have done on the banks, thanks in advance

    Josphat Kariuki
    on February 5, 2014, 4:53 PM

    Thanks for the article.

    However, a chama that I belong to, approached Rafiki DTM and enquired about this facility and we were told that it is also subject to the amount that the chama is saving on a monthly basis. I.e. We can only qualify for a loan whose repayment is 70% of our savings. For example, we have so far saved 500K with a monthly saving of 60K yet we were told that we can only qualify for a 1.6M loan instead of the 9 times i.e. 4.5M How is that????

      Martin Njuguna
      on June 27, 2014, 6:44 AM

      Thanks Josphat. We will get in touch with Rafiki and request them to clarify this directly with you

    on March 6, 2015, 7:08 PM

    which chamaa has the highest membership?and is how many
    and do account chamaa has their own names

      Martin Njuguna
      on March 10, 2015, 3:13 PM

      Ahoy, Thanks Mike. Kindly clarify your comment. In case you are asking for chama details, we dont share our clients details

    on April 9, 2015, 2:40 PM

    Hi ,We have registered our Chama of 14 members,and are looking into opening either a bank account or open an account with a reputable micro finance bank or a sacco.
    Kindly,advise on the suitability of each option since we are really desiring to grow.

      Martin Njuguna
      on May 9, 2015, 2:27 AM

      Hi Sally, kindly check some reviews we had done sometime back on the chama products available from various financial institutions, hope that you will be able to select the right bank or sacco

    on June 11, 2015, 12:17 PM

    Hi Martin, many thanks for the ideas that chamasoft shares with guys. Been trying to search for insurance firms that offer medical and life covers for chama members. Any insights?

      Martin Njuguna
      on September 25, 2015, 3:58 PM

      Thanks for the email. We will be providing more information and a resource platform for other related services on our site by the end of 2015

      Thanks again

    Benson Njau
    on August 7, 2015, 11:54 PM

    Hi Martin,
    Good job you are doing. Any idea on where one can find info on registering a chama in Kenya for guys in diaspora? From requirements to the right department to send application to forms etc. Unfortunately no reliable source can be found online. Thanks.

      Martin Njuguna
      on September 25, 2015, 3:56 PM

      Thanks Benson for writing to us, We will be providing more information on how to register your group and how to do the formalization all in one place and we are working on that

      Thanks again for reading


    on November 12, 2015, 9:37 AM

    Hi Martin, we have a group but we are saving with a different bank are we in aposission to access this loan?

    keneth kimathi
    on January 25, 2016, 1:01 PM

    qui i can assist on th part of insuarance services .am working at britam insuarance kenya.

    keneth kimathi
    on January 25, 2016, 1:03 PM

    mr martin we can communicate incase of any client needing insuarance services for chama members thankyou.

    Samuel mmwaura
    on February 1, 2016, 11:16 AM

    Hi Martin,,thanks for the good job,,where are you located in Nairobi please,,i would like to get more informstion about the chamas savings

    John Mwangi
    on February 17, 2016, 8:04 PM

    I appreciate this piece. How can I get notifications on new postings?
    Thank you

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