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.
A Chama is a group of individuals who come together with the
aim of pooling their resources to invest in different ventures.
These ventures can be real estate, stocks, or any other
investment that the members deem suitable.
In Kenya, chamas are very popular, and they are seen as a
way of achieving financial freedom. If you are thinking of registering a chama
in Kenya, this article is for you.
Create a Name
The first step in registering a chama is to come up with a
name. The name should be unique and not be similar to any other chama in the
country.
Once you have a name, you need to conduct a search on the
eCitizen website to ensure that the name is available.
If the name is available, you can proceed to reserve the
name. The name reservation fee is Kshs. 100, and it is valid for 30 days.
After reserving the name, the next step is to register the
chama. To register the chama, you will need to have a minimum of five members.
The members should be at least 18 years of age and Kenyan
citizens. The registration process can be done online through the eCitizen
portal.
You will need to create an account on the portal if you
don't have one. Once you have an account, you can proceed to fill in the chama
registration form.
The Chama registration form requires you to provide the
following details:
- Chama
name
- Physical
address of the chama
- Names
and ID numbers of the members
- Email
addresses and phone numbers of the members
- Proposed
activities of the chama
- The
contribution amount per member
- The
duration of the chama
Once you have filled in all the required details, you can
proceed to pay the registration fee. The registration fee is Kshs. 1,000, and
it can be paid through mobile money or online banking.
After paying the fee, you will receive a confirmation
message, and your chama will be registered.
After registering your chama, the next step is to obtain a
chama constitution. A chama constitution is a set of rules and regulations that
govern the operations of the chama. The constitution should be in line with the
Kenyan laws, and it should be signed by all the members of the chama. If you
are not sure how to write a chama constitution, you can seek the services of a
lawyer.
The chama constitution should contain the following details:
- Name
of the chama
- Objectives
of the chama
- Membership
details
- Contribution
amounts per member
- Meeting
frequency and venue
- Roles
and responsibilities of the members
- Procedure
for admitting new members
- Procedure
for withdrawing from the chama
- Procedure
for expelling members
- Procedure
for winding up the chama
After obtaining the chama constitution, the next step is to
open a chama bank account. The bank account should be in the name of the chama,
and it should be used for all chama transactions. You can open a chama bank
account in any bank that is convenient for the members.
To open a chama bank account, you will need to provide the
following documents:
- Chama
registration certificate
- Chama
constitution
- Minutes
of the meeting where the decision to open the bank account was made
- Identification
documents of the signatories
- Two
passport-size photos of the signatories
After opening the bank account, the next step is to hold the
first Chama meeting. The meeting should be used to discuss the chama
objectives, investment opportunities, and the contribution amounts per member.
Here is a simple process of running a successful 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.