I know this topic has been talked about and expounded by various people but I just have to talk about it and remind us of its benefits in our society. Chama is a Swahili word, which means group or body. It’s know to people as “Merry go round.” or “Micro savings group.” I started hearing about chamas or this micro savings group when I was a kid. My mum used to be a member of at least 3 to 4 of them. She never miss to pay or attend most of the meetings. Some of cash she got payed our tuition fees in school, bought some of the households equipment in the house and even bought lots and lots food staff that could last us 3-4 months.
Anyway I have grown up knowing Chamas are of great importance to us. Especially when you are a good and discipline contributor but a poor saver. It gives you an opportunity to save and before you know it you have some good cash to take to the bank or use it to improve your life. The Chama idea is not for women only men too have been encouraged to join by their wives, mothers or sisters. But the reason why people see it being a women’s thing is because women have come to embraced it more.
Most chamas now are informal investment group, known to be run or governed with no rules. It could consist of former classmates, colleagues at work, neighbors, friends and relatives. Where the members having a common interest come together and contributing some cash with an aim of getting a huge sum of cash to invest in big or rather small projects and earn interest, dividends or profit, which is then distributed to members based on their contribution. The contribution could be done daily, weekly, monthly, quarterly, after 6 months of even yearly. It all depends with members’ agreement.
Even though most of the Chamas are known to be informal organizations, they can be registered and developed into a bank and offer loans to people at an interest. Before you join a Chama you need to know what type it is. So check out this types of Chamas you can join.
- Merry go round-This is where individuals contribute the stated cash money, and given out to one or more member in the group. One receives the amount according to what he or she contributes. Let us say you contribute Ksh 50 every day for 30 days, the sum total comes to Ksh 1,500, for 1 person. So if the group has 10 people he or she will receive Ksh 1,500 from 10 people coming to 15,000.This process is repeated until all the 10 members get their share hence, the term merry-go-round.
- Table-banking-It’s somehow like merry go round but it differs in a number of ways. In Table-Banking basically the members come to contribute an equal some of cash but then the cash is borrowed by the same members at an interest. The good thing with this type of chama the cash grows since the borrowed cash is payed back with an interest and at the end of year the interest which is a profit is given to the members as dividend. Which is shared to you according to your monthly contribution.
- Self-help group- In this type of chama members try uplifting each other’s living standards. For example buying each other house hold equipment, boosting each other’s business with capital contributions. This type of Chama has been embraced now days especially for the Young men and women starting life and need support.
Importance of joining a Chama
- Exposure- once you join one Chama you will definitely learn a number of things about it. For example you will realize not only banks give loans.
- Sence of belonging- increased social support in times of need from the group you will realize most of the members have financial difficulties just like you. Hence most Chamas makes people realize a good number of people have financial difficulties.
- Builds you- this group helps you grow financially, mentally or even sometimes spiritually. It all depends with the friends you engage with.
- Helps in saving- most people don’t realize it but Chama help in saving. You don’t necessary need to hold cash or take it to your savings account for you to justify to yourself that you are saving. Chama is like an investment. Patience is all you need and before you know you will be skilling all the way to the bank.
- Opportunity to get loans- Since banks are known for giving loans at higher rate most people prefers joining Chama which give loans at affordable interest rates. Not forgetting the rules and regulation that are not so tight and hush, for example when it comes to security attached to the loan.
- Helps lift members self esteem- sometimes people need to be told by friends of there abilities for them to realize they are capable of handling leadership positions in the society. For example when elected to be among the leaders of the Chama, its only then that one will realize his or her skills hence you get to have that confidence boosted.
- Emotional support-in times of difficulties for example when a member is bereaved and time of happiness when one is organizing a baby shower, wedding or birthday, members come support the affected individual.
- Helps one improve his or her living standards- most of this Chamas are formed out of the necessity to uplift the economic status of members.
- Boost your chance to getting a loan in the bank- banks get the confidence to give most Chamas a loan since they are sure the risk is spread in term s of paying the loan. And also they are sure the members will be each others keepers so that no one doesn’t deferred to pay his loans.
- Spread risks- when it comes to investing most people get confidence when a business idea pops up and a good number of individuals go ahead to grab the opportunity. At least one is sure and confident that in case of anything they will share the risk.
- Business ideas shared- from the meetings members share a number of ideas that one never thought they existed. This gets you encouraged to attend meetings since you will have an opportunity to grasp a number of business ideas.
- It’s a networking avenue-knowing people around you gives you a number of opportunities. From them you can learn where to get good supplies for your business or you will get employed through your friend s connections.
- Friendship- having a number of friends is very important since most will be there in times of difficulties.
- Stress reliever- some of us just need to get a friend or friends who they can just express their frustration to whether he or she will provided solutions or when you have that friend who listen make you feel relieved and appreciated.
- Discipline- from the Chama you will get to learn the rules and regulations governing the Chama. From the ones governing meetings, loans borrowed, members joining. So this rules helps the members to be at per with the regulations so as not to be kicked out of the Chama.
- Advise-chamas is open to people of all ages and the good thing is most of young men and women have joined with an aim of improving their living standard. Different ages opens for the young members an opportunity to learn one or two members from the elderly members.
As far as you you feel encourages by this idea of chama. There are a few things you need to know about these chamas before joining since it’s your money, they include;
- Number of members in the chama-i would not advice anyone to join a chama with lots of people especially if you contribute monthly before the cash is shared to a chosen member. Most people give up since it takes time for there turn to come. For example you are 20 members and you do contributions monthly one would definitely have to wait for a full yr and 8 months before he or she gets his or her turn. One would definitely give up. But some members have lots and lots of people but they contribute enough cash to give to more than one person hence this could be encouraging. Making it easy to accommodate more people in a short time.
- Management- this is key when it comes to choosing a Chama, check out how they implement the rules they have passed, how they manage the funds collected and also if there is fareness when it comes to they way they treat all members. There should be no discrimination or biasness.
- Contribution- join a Chama that contribute an amount you can afford. You don’t have to struggle just to impress your family or friends.
- Members caliber- I would not go or join a chama of people whose rank in the Society is high compared to mine. Only if i can afford then I could consider comfortably join.
- The reason for starting- we have different Chamas that are started for different reasons. Chose one that you will be comfortable with not forgetting to check out for its benefits.
- Period to receiving your contribution- this is important for most people since one could give up if it take long before his or her turn comes.
- Interest charged on loan in case you borrow- especially for those Chama that give loans to its members. Comfort is key. You don’t have to borrow a loan and later have a hard time paying it.
- Rules and regulations- tough rules and regulations need to be implemented in verioua Chamas since they are informal organization. But sometimes some rules could be so uncomfortable to go with making one frustrated to a level of giving up.
So before you join any Chama be on the look out for the above.