Search for Savings & Loans
Chama Revolution: What Successful Chamas Know & Do, Why Many Fail
Chama Revolution: What Successful Chamas Know & Do, Why Many Fail
See The Best Loans Available in Kenya Today
Money Management

Chama Revolution: What Successful Chamas Know & Do, Why Many Fail

Sheila Brenda Andoi
October 22, 2021

Did you know that the rise of the self-help groups in Kenya commonly known as Chama was pioneered by women?

Well, most of us can vividly remember how our mums and aunts would meet after a certain period of time and make contributions and discussions on finances over a cup of tea, snacks and/or food. That is what we are talking about today. Tag along.

Chama is a term used to describe self-help groups in Kenya. A Chama is an informal cooperative society that is used to accumulate and invest in savings. Chamas are also referred to as micro-savings or investment clubs.

In Kenya, there are estimated to be 300,000 chamas that control up to a total of 300 billion (US$3.4) billion in assets. And according to a report by Financial Sector Deepening  Kenya (FSD Kenya), an organization working to promote financial inclusion in Kenya, chamas were already being used by 41% of Kenyans by 2018.

FSD Kenya traces the origin of chamas to women labour groups. Although chamas tended to be for women only, over the years after their growth and huge successes, men have also opted-in.

Chamas typically used a merry-go-round structure in which all members contribute a certain fixed amount monthly or weekly or even daily. The amount is then given to one of the members in turns. 

Over time many chamas have started to formalize with some even registering as companies investing in various areas including real estate and transport. A common feature that has been maintained is table banking - where members can borrow from the pool of contributions available. 

Chamas (in all their different forms) are so popular in Kenya that  financial industry analysts estimate that at least one third of Kenyans belong to one.

“One in every three adult Kenyans is a member of an investment club. We believe that these clubs have a lot of potential. If the capital they have is properly harnessed, it would help our country immensely,” says Patrick Kariuki, the chairman and founder of the Kenya Association of Investment Groups (KAIG). 

Advantages of Chama Membership

According to KAIG, some of the advantages of chama membership include;

  1. Chamas lower the risk level of the members’ personal loss because they make investments as a group and therefore, in case the profits are not realised as projected, individual loss is very minimal.
  1. They allow members to learn and benefit from the shared ideas and experiences with other members. Through interaction, members can get the opportunity to research, analyze and spot different viable opportunities, hence providing a learning opportunity.
  1. Chamas are a great way for people to meet and make valuable contacts and also meet like-minded people. Since these groups consist of people from different lines of professions and backgrounds, it is an opportunity to build healthy relationships and create long-lasting friendships.
  1. Chamas provide discipline and structure. Personal/individual saving proves a challenge for many people and being in a Chama will allow you to contribute to the savings group either monthly or weekly and it’s not easy to break your commitment because other members are there to keep you accountable and disciplined.
  1. A Chama creates a source of wealth. You can save and raise a certain amount of capital you require for a project much faster than you would as an individual.  Investing creates a long-term return on wealth.

Why Most Chamas Fail 

Many chamas start with the big picture of being the very best place to save, borrow, and invest. However, according to statistics, either most chamas collapse within the first two years of formation, or the members become dissatisfied because their goals are not being met. 

Here, are some of the reasons why most chamas fail;

  1. Lack of transparency

Transparency is one of the major reasons why chamas go under. Lack of honesty with funds and bank or M-PESAa statements could lead to the failure of a Chama. 

In most cases, groups fail to seamlessly account for all their transactions. Research by FSD Kenya has shown that theft and embezzlement of funds in chamas stand at 13%.

With the ever-increasing technology, chamas can now even use mobile phone applications to better manage their savings. 

Apps such as ChamaSoft, EazzyChama, Chamanett, Tekeleza, and DigiChama can help your savings group to manage all your group investments including; helping in financial record keeping thus allowing for a more transparent flow of resources. 

  1. Leadership problems

Electing leaders for a chama is key to its success. If the leaders are effective, the Chama becomes effective. 

The problem is that many chamas fail at creating an effective formula of selecting reliable leaders. Sane, trustworthy leadership might be all you need for your chama to function.

  1. Failing to have clearly set rules

A sailor cannot operate a ship without a compass because they will either get lost, crash or sink the ship. For any chama to sail well, you need to have set rules and regulations that will be your guide.

They may not be complicated rules but simple rules like time management and contribution deadlines can actually make a chama fall if not properly adhered to. 

You need to have a guiding framework for all the members with the consequences of breaking them for your investment group to succeed. 

How Can You Make the Best of Your Chama?

  1. Have a shared purpose

As members of the Chama or savings group, what is your goal? What are you saving towards? What do you want to achieve? Do you have a shared goal of what you want to achieve? What projects would you like to invest in as members?

How much will you contribute and within what period to ensure that you are actually working towards actualizing your goal? Do you want to lend money to members? If so, how much and at what interest rate?

  1. Ensure that you adopt professionalism

Once you have identified your specific goals as a group, it is important to have leaders who will ensure that there is a smooth running of events and finances. Elect a chairperson, a treasurer, and a secretary according to how you decide together.

This will help you have a clear leadership structure and proper record of meeting minutes, and your cash flow as well. Agree on how often you would like to have meetings and how your meeting will be structured as well. 

Handle everything professionally even if you just began the Chama as friends. Professionalism ensures that in case anything happens like a fallout, your records are well kept.

  1. Review your progress

During your monthly or weekly meetings, let that be an open floor for the members to give their suggestions, ideas, criticism, and allow them to voice their opinions, requests and concerns.

That can come in handy because during such meetings you gain insight on how to better your Chama savings and investments. It is a time to review your group and check how far you have come and how you’d want to progress even further.

  1. Go beyond your money and savings goals.

In as much as your Chama is professional, recognize that members have a life beyond the group. You can build great relationships that are more than just contributing and saving in your Chama.

Build each other up. If one of you has a wedding, burial, hospital bill, or graduation you can come together and organize how you can come through for them and stand with them. Make your impact go beyond your Chama meetings.


Merry-go-rounds and Chamas have become a way of life for many. And coming together to achieve a common goal is a great thing. 

Chamas provide an opportunity for most people to create a transparent way to raise resources.  Since you have people to ensure accountability, this makes it easier for many to be committed and consistent.

If well managed, a Chama can be a great informal way of harnessing capital, bringing about self-improvement, and achieving financial success.

Sheila Brenda Andoi is a communicator, journalist, editor, and writer passionate about human-interest stories. You can find her on Twitter @sheilaandoi

Learn more about Personal Loans available in Kenya on Money254

Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.

Instantly search loan products from established providers in Kenya and compare on the terms that matter most to you.
Find the best Personal Loans for me

Stay up to date with your money - sign up for our newsletter today.

Get updates from the Money254 team on financial news and new Money254 features.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.