4 Benefits Young Kenyans Can Enjoy By Joining A Chama For Financial Success

By Florence Mukunya,

Chamas originally belonged to women; this kind of financial institution is formed by friends with common interest. They pool resources together for a period of time and each member of the chama receives their share of the money at an agreed time. The cycle goes on until everyone has received their share.

“If well managed, chamas can be of great benefits for example in harnessing capital,” says Andrew Makhulo a Financial Consultant at MGK consultants.

He says that a chama is a social group that brings different people together with a view of contributing towards a common goal.

Mr. Makhulo opines that, “A person should join as many chamas as possible, but they should ensure that they are able to handle the demands of each one of them.”

As much as these institutions are good, there are people who are known to have so many of them that at the end of the month, they are left with nothing after contributing money to the various chamas.

What factors do you consider before joining a chama? I ask

“One should consider the amount of money they earn as it beats logic to contribute somewhere as a savings only to borrow from somewhere else shortly after that,” Mr. Makhulo advices

He adds that, “A savings account should not be substituted with the Chamaa; one must make sure that they are able to contribute for both the Chama and the saving account.”

According to Mr. Makhulo, here are the benefits of joining a Chamaa.

1. One can get loans easily.
Getting loans requires collateral, but with the Chamas you can get a loan easily since you already are a member.
“Chamas help members get loans easily, they also allow borrowing of small amounts of money as opposed to other institutions which either take time or require big collateral that one might not have,” says the financial advisor.

2. One can easily get business ideas
Getting business ideas in a chama is easy as opposed to paying for the same service from professional advisors.
Mr. Makhulo says that, “Members of Chamas should come together with one aim; which is expanding their horizons financially, these requires discussing on steps they could take to achieve that. It’s during such meetings and discussions that one gets incredible business ideas.

3. Networking avenue
Chamas consists of people from different lines of professions. Seeing that they are initially started as social groups it allows people to interact with each other.

Mr.Makhulo tells me that, “Chamas are a great avenue for people to network; members can easily get referrals from each other say for jobs or other great opportunities.”

4. Source of saving

Chamaas act as a way of saving declares Mr. Makhulo, “The minute you contribute Kshs 2000 at the beginning of the month you are supposed to get a certain amount later, the total sum being the sum of money you contributed multiplied by the number of members in the Chama. It’s a great way of saving, especially for those without the discipline of saving.”

Finally, Mr Makhulo has some advice for a chama member.

He says that, “For a Chama to be a source of benefit, members should not receive their share and store it. A focused person should put their money where it can multiply.”

He also advices that, before investing one should consider the risk factor, he is also of the opinion that one should not bank such money as the bank’s interest is insignificant.

Yes, a Chama is a great informal way of harnessing capital to bring about self-improvement and achieve financial success.

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