Chamas Don’t Work

I’ve been around too many Chamas to beat around the bush anymore. You may be attached to your Chama.  Have great plans for it.  You may even have started out with the best intentions.  To be the next Centum or various other examples that people constantly use.  But go out and talk to people who are in Chamas.  Listen to the frustration.  Listen to the discontent.  Sometimes you will even hear squabbles between members.  So many people are in Chamas but many are facing the issues I have just mentioned.  Say a company came out with a new phone.  Then out of the 10 models produced, eight did not work.  It would then be fair to say that the phone doesn’t work.  Hence why I am saying Chamas don’t work.  Most people especially in modern day middle class Chamas are not wealthy because of that investment group that was started 5,10, 15 years ago. Most people are simply “hoping” that at some point something will happen to make their investment group become the next big thing. But sadly they keep doing the very same things that ensure that the Chama will not work.  So at best it will be a savings scheme. Your Chama firstly will not work because you think like a Chama as opposed to a business. There was obviously something done different with the two phones that worked, right? Hence the few investment groups that do work are doing something different and it starts with how they see themselves. Are you in business or are you social? It’s amazing how in their everyday jobs people may be in charge of making money for others.  We have found in the Chamas we have trained that there are people in charge of multi million shilling budgets, projects or even have targets at that level that they usually meet.  These are sometimes the first people to complain about paying for professional services or information.  They may even be the ones who dispute a proposed Kshs 5, 000 increase to monthly contributions and want to be ultra conservative with investments.  Yet they spend that same Kshs 5, 000 in the very same bar that they claim to be holding the Chama meeting. There is no serious business owner who does that i.e. randomly spending the very same capital that your business needs to grow. In a nutshell if members of the group are contributing the same money that you can actually afford to loose (e.g. the same Kshs 5, 000 you spend in the bar) there’s no hope of this going beyond a general investment pool with general or below average returns.  Are we willing to take our investment groups to business level seriousness?  Are we willing to slash our personal entertainment to up the ante on the money we raise? Are we willing to approach it with the same mentality as we do our jobs or businesses? Are we willing to put in the personal time and effort to make this business work? A few are but many are not.

Your Chama will not work when five years later you could have done those exact same investments yourself. Do the math.  What is your personal value in the group i.e. the value of your share in the group’s investments?  What the difference between that and the contribution you have actually made? Would you have been at the same level if you had invested the money yourself? Some of you will do this calculation and realize you could have done better alone or maybe even with fewer people. Is the advantage of pooling resources together truly working for you and commensurate with the time and effort you put in?  If not this really needs to be looked at through honest eyes. The same eyes that meet you on the opposite side of the desk at work when targets are not met.  Are the investments you made the kind that you could not have done alone?  This is what I mean.  There’s a group that for the last three years has held their money in cash. Yes they are earning an interest. However it is no different than if an individual went and put their personal money in their own savings account.  I also throw this challenge to groups whose money sits in the stock market. You can buy those same shares and get those same percentage returns as an individual investor.  The pooling of resources in that case has not worked.

Finally if the points presented today describes your group, trust me, there are some of your members who at some point woke up to this realisation.  They may have stalled contributions. Or they are still contributing for the social obligation but their attention has gone.  They may even be in other Chamas that are now the real deal doing real investments that you do not know about.  Don’t get me wrong.  I’m not blaming the institution of the Chama. It’s made of people and it is people making the mistakes.  Even you, who may feel fed up with the Chama, are an essential part of the problem. Don’t be indignant after reading this article.  It is your fault too that your Chama is not working. This is a problem that you either decide to fix as a business and in a business format (not in the bar) or agree that the original objective of making money is simply not being met. If there is no willingness you are actually better off looking for other avenues for your money.  If you are willing to be the few that work, roll up your sleeves and do the dirty work.

Waceke runs programs on Entrepreneurship.  Find her at waceken@centonomy.com| twitter @cekenduati| facebook.com/cekenduati