How to Use ‘Chamaas’ to Achieve Your Financial Goals

Written by Wellington Ayugi

A key pillar to achieving financial independence lies with investment. While some people are capable of making investments on their own, a good number need the support of others to fulfill their investment goals. That is how Chamaas come into the picture.

Growing up many of us witnessed our mothers attend Chamaa meetings at nearby homes, and even host a few. We are familiar with the merry–go-round system they used, where one lady would receive funds from other members every month. 

However, things are changing today, as many of us are getting interested in investing in large investment projects so as to achieve higher returns. Therefore, teaming up with other like-minded individuals is a good way of achieving these financial goals that may be well beyond your individual grasp. A Chamaa presents you with a good option for you to accumulate resources for the purpose of investment.

What is a Chamaa?

A Chamaa (or investment group), represents a group of individuals who pool resources together on a monthly basis and use the resources to empower one of their members financially. The cycle is repeated until every single member benefits from the collective fund. 

However, most Chamaas today pool resources together on a monthly basis for the purpose of saving it. Usually, members of a Chamaa contribute a fixed amount to a common collectable account and increase the amount over time. The money collected may be used for investment purposes or to provide loans to its members in the case of an emergency. 

In Kenya, women are have been the pioneers when it comes to setting up and joining Chamaas but that is slowly changing with many men getting involved in similar investment groups. 

How Can a Chamaa Work for Me?

Chamaas in Kenya act as an avenue for their members to save money.  You can use a Chamaa to achieve your financial goals if you partner with the right people. With proper planning, they can work to benefit many of you by increasing the scale of your savings and investments.

In order to make the Chamaa work in your favour, here are a few tips: 

  1. Determine the Goals of the Chamaa

Before you start or join a Chamaa, you must figure out your personal financial goals and if they are aligned with the Chamaas financial goals. You must also consider, What is your reason for joining a Chamaa? Do you want to belong to a group or do you need extra funds? Are you content with savings or are you concentrating on investments? What do you want to achieve? The answers to these questions will assist you to decide the type of Chamaa to form or join in Kenya.

  1. Find Similar-Minded Individuals

If you are forming a Chamaa, ensure the members share and have the same financial goals as you do. They must not only be able to afford the monthly contributions but also be willing to increase the amounts over time. Hence the group will have more money at their disposal for investment.

  1. Increase and Retain Your Savings

It makes very little sense to continue contributing funds every month only to get an accumulated amount after a short period of time. A Chamaa that retains a part of the contributions and deposits it into a savings account regularly, is in a better position to purpose that money for investment and provide loans to members in the event of an emergency. Banks nowadays have established group accounts which Chamaas can use to save money.

  1. Use as an Engine for Investment

The group can be used by members to invest in projects or start an enterprise. This can be done on an individual or group level. The group can decide to save money for a period of one year or more.

After the period is complete, the members can be provided with startup loans for their personal businesses, according to an agreed formula or invest in various projects such as real estate. The loans given out shall eventually have to be repaid at a profit.

For investment, Chamaas are advised to consult with experts on the various options available in line with their resources. You can watch this VIDEO to learn the benefits of diversifying Chamaa Investments.

In conclusion, there is a proverb that states “do not put all your eggs in one basket”. Chamaas are no exception to this rule. If you contribute all your life savings in a Chamaa, and a member defaults on a loan, you will end up losing a lot.

So it is wise you save only what you can afford to lose. If you intend to use your Chamaa as an investment vehicle, ensure you adhere to all rules relating to financial transactions. A Chamaa offers the best way for you to achieve your financial objectives and bring about personal development.

Are you in a Chamaa and was is it helping you achieve your short-term and long-term financial goals? Please comment below and let us know your experience.

Learn More:

  1. Chamaas with wealth and influence
  2. Benefits of legally registering investment clubs law

About the author

Wellington Ayugi

Wellington Ayugi handles Business Development at Covered and has a passion for personal finance, microfinance, and developments in financial technology