Investment Groups or Chamas have turned out to be the most popular modes of investments for most people.
People come together and form Chamas so that they can invest their resources. A Chama can only grow with the help of its members, who need to be collaborative and with shared goals to be achieved.
Contributions from members
Key to any Chama is the availability of funds, which are usually contributed by each member. Mostly, every member is supposed to give a stipulated amount of money toward the Chama at the set periods, e.g. once a month, twice or even weekly. This is the money that is used for investment purposes or any other project at hand. At the end of the day, the goal of the group has to be achieved. Therefore, one way a chama can get funds is through contributions from members.
Interest on loans given to members
Another way in which chamas generate funds is from the interests attached to the loans taken by members from the chama. Whenever a member borrows money, it comes back with interest depending either with the period taken for the money to be returned or the amount borrowed. With interest on top, it makes the investments to grow and not remain stagnant.
Investing the money
When a chama decides to invest in a given area, say agriculture, real estate, transport or any other area, there are chances of making profits. This makes them make more than what they initially used to invest and thus generating funds to expand on many more investments that may be agreed on.
Fundraising is another way in which a chama can use to generate funds. Here, in case there is a project to be undertaken, a chama can decide to seek funds from its members with the help of other people that are not members. Fundraisings can be done in churches, political rallies, or any other function that brings together people.
Getting a loan from a bank
There are banks in Kenya that specifically have accounts set aside for Chamas. Rafiki Microfinance Bank for instance, has a product called Chama Account. The account helps Chamas to save, earn interests and get loans at affordable rates at any time. The lender also trains members of the chama on how to invest, where to invest and helps them with funds to invest.