Investment

3 Things That Affect The Effectiveness Of Your Chama

BY Soko Directory Team · August 18, 2021 09:08 am

KEY POINTS

When it comes to mistrust in chamas, Malipo Circles reduces these by automating the financial processes and making them simple enough for every member.

Investment groups or chamas are groupings of individuals with similar interests meant to empower and improve the livelihoods of the members. People are members of a group in one way or another, be it for an investment or for to help one out of a situation.

Kenya has over 300 thousand ‘chamas’, making them reliable financial vehicles for millions of people across the country. These groups play a major role in Kenya’s economy, including enhancing financial inclusion that has always put Kenya on a global map.

Platforms such as Malipo, a mobile app, and service that lets people, friends, families, and investment clubs or ‘chamas’ to easily lend, borrow, and fundraise money for a myriad of scenarios, was created on the premise of the ideology of taking investment groups to the next level.

Did you know that most chamas fail within 2 years, or the members become disgruntled because their goals are not being met? Why?

Lack of Transparency

Traditional chamas require members to open ‘Chama bank account and then hold meetings to collect contributions, then send money to the treasurer to deposit it in the account.

This approach rarely works and can easily lack transparency. Members remain clueless on what is happening until bank statements are seen and at which point they meet again to review the statement together.

Mistrust

Trust is the only invisible currency that all business and investment thrives on. Most chamas fail because of mistrust among members lack as well as the leadership. Research by Financial Sector Deepening, Kenya showed theft and embezzlement of chamas money stood at 13 percent.

More often than not, the lack of trust is fuelled by the fact that the running of the chama is left to the leaders. For example, all the accounting and record-keeping is handled by the treasurer. This sometimes leads to lots of disagreements around amounts, interest rates, contributions, etc.

No Rules

Most Chamas have failed due lack of such simple but clear rules as attendance requirements, contributions, and deadlines. For an investment group to succeed, there should exist a guiding framework for all the members as well as the consequences of going against the policies. Without clear guidelines, some members might not give timely contributions or may skip making their contributions which will lead to the death of the group.

How does Malipo help Chamas?

When it comes to mistrust in chamas, Malipo Circles reduces these by automating the financial processes and making them simple enough for every member.

In terms of following the rules, Malipo makes it easier to enforce them. For instance, a ‘merry go round’ with respect rule that everyone contributes monthly but only one or more of them can take a loan at a time, Malipo Circles automates the whole process for chamas to do so much more efficiently and transparently.

In enhancing transparency, Malipo App simplifies this process by enabling chama to account for all transactions seamlessly and transparently. It provides a better way to do collections, accounts, and do summations then transfers the money to the chamas bank account.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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