When a member decides to leave the Chama, it brings upheaval to the group as there is less contributions per month plus you have to withdraw savings from the bank or liquidate investments so as to refund to the leaving member her investment share. Plus, there is the headache of finding someone new as a replacement. Clearly, when you have a member leaving it is not a walk in the park. Thus many Chama leaders try to discourage members from upping and leaving and put in measures to encourage them to stay and deter withdrawals.
One of the measures you can put in place as a deterrent is the withdrawal fees or leaving fine if you will. Whilst some Chamas may feel awkward fining a withdrawing member, it is actually in order. Embrace the issue of a withdrawal fee. Many Chamas charge a withdrawal fee for one of two reasons. Some charge a withdrawal fee to discourage frequent or repetitive withdrawals. Yet others charge a withdrawal fee to reimburse the Chama for the expense of liquidating that persons share of the Chama, whether those expenses are incurred either now or in the future. The most common withdrawal for Chamas is 2 percent of the total investment value that the member has contributed plus any expenses incurred such as legal fees.
Another option, is the issue of remaining members ‘buying out’ withdrawing members. What is commonly referred to as a buyout really isn’t a buyout at all. Money and units should never pass directly between individual members. In all but some very limited situations, the transfer of units from one individual to another would cause a long term accounting nightmare that would best be avoided. The way around these problems is to have the remaining members invest additional funds into the Chama and then the Chama pay the withdrawing member with cash, liquidating that members unit.
The truth is many Chamas charge no withdrawal fee at all. Others charge the amount of
actual costs incurred to affect the withdrawal. Still others believe that members should be discouraged from using the Chama as a savings account, and charge a much stiffer fee, especially in the early years of a member’s participation. Each Chama must come to grips with the issue in such a way as to be consistent with what members feel is right.
In short, charging a withdrawing member fees is in order as it works best for the Chama. One, it helps you retain your members plus helps you cover your liquidation expenses. As always, be sure to follow your Chama’s constitution whenever processing member payments and withdrawals. Remember not to create bad blood with the leaving member by staying too long with her dues. Make a point of paying up within a month or so. Also, as a Chama leader it would be a good idea to hold a one-on-one exit interview with the departing member. Ask her to be as honest with you as possible and explain the real reason she is leaving the Chama. Most of the times you will learn a thing or two and perhaps do something to prevent more members from leaving your Chama.
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