Most banks and other investment companies in Kenya started from the base, as Chama’s. The now revolutionary Chama had been left for the village women who would make small contributions to buy utensils, wheat flour and all those items our mothers used to buy. However, this has already advanced and the Chama’s are now formal business entities for workmates, students, business owners, etc.
The process of starting a Chama is simple though to some people it might seem a tedious process. Here is a simple process of forming a Chama:
- Defines the Investment goal
Running a success Chama requires total dedication from members and should have a clear vision, mission and objectives like any serious business entity. Lack of a clear vision is the leading cause of Chama failure. Have a clear goal of what the Chama wants to achieve in terms of investments, increasing income and potential businesses. - Identify individuals with similar interests
A successful Chama needs serious individuals who are committed, innovative and share the same interests as the other members. A good Chama should be able to benefit from the diversity, knowledge and strengths of its members. It may consist of professionals, self-employed, students or any category of persons that agree to the same cause. - Choose a leader
Success of any entity majorly depends on the type of leadership provided by those at the helm. Similarly, a Chama should have good leadership that will change the dynamics of the group. Also, it will ensure that members are committed to the investment goal. The members should also contribute to decision making and this will strengthen the leadership of the Chama. - Agree on Duration
At the start, it is important for the members to agree on how long the Chama. The duration will depend more or less on the investment goals of the Chama. For long-term investments, the Chama will last for a longer time e.g. 10 years. The duration will also allow members to make enough contributions to start a sustainable investment. - Agree on a savings plan
The members should agree on a savings plan depending on the type of investments they plan to undertake. The contributions may be made daily, weekly, monthly or even quarterly. Members may agree on a fixed or varying amounts of contributions. - Agree on regular meetings
The members should agree to hold regular meetings to keep members updated on the progress of the Chama. The venue of the meeting should be decided in advance prior the actual day of the meeting. To cut on cuts, most Chama meetings are held at the residence of members or at their work station where the Chama members comprise colleagues working in the same station. - Invest in low risk project
Once the investment group has enough savings, it is wise to invest in low risk projects that will yield returns within a period of one year. The low risk project aims at building members confidence. After a few successful investment projects, the members can now try larger and slightly risky projects that will give higher returns than the previous low risk projects. Part of the profits can then be shared, either equally or as per the contribution ratio. Other profits can be re-invested in other profitable ventures.
Editors final word
The group leaders should work extra hard to keep the members committed in the affairs of the investment group. The leaders should ensure that contributions are made on time and the members contribute in the decision making process. Regular meetings will keep everybody updated on the progress of the Chama.
