Lobby moves to streamline Chamas

By NICHOLAS WAITATHU

In 1997, a group of 29 wealthy businessmen, mostly from central Kenya formed TransCentury. It started off as a simple investment vehicle commonly referred to as  chama. The tycoons had vitality and each of the 29 was to bring to the table Sh1 million each. They had ambition.

They invested in SABMiller, taking EABL head-on. They wanted their investments to transverse Kenyan borders, extending to the rest of Africa. That ambition saw TransCentury take a controlling stake in the listed East Africa Cables in February 2004, from the Naushad Merali-controlled Sameer Group.

When the stock market rebound in 2004, TransCentury saw their investment in East Africa Cables surge. This in turn spurred a whole new generation of chamas.

An association of Chama’s was formed, the Kenya Association of Investment Groups (KAIG). Even banks started enticing chamas with special accounts for them. The Chamas were everywhere then. Nearly  17 years later since TransCentury was formed, Chamas have become a force to reckon with. Property firm Home Africa also started as a Chama.

Control investments

Investment groups or Chamas have morphed into financial machines. They control investments worth billions of shillings across diverse sectors of the economy, including real estate, transport, manufacturing and stock market, among others. KAIG Chairman Patrick Kariuki says there are more than 300,000 Chamas operating in Kenya but the organisation has only registered about 7,000 investment groups.

But even with this growth, the investment groups have been operating without a guide to inform sound management. Last week, KAIG and other players in the investment industry launched The Chama Handbook to act as a guide to the proper formation, management and growth of an investment group. “One key pressing membership need over the years has been for a one-stop reference manual for our membership.  It is on this premise that the second Chama handbook has been published to build on the first education published in 2012,” said Kariuki.

The current edition covers issues like assessing your risk profile, taxation, and insurance, how to form an investment policy including valuing and monitoring group assets. Kariuki says the handbook will assist in inculcating saving culture and thus enable people to tackle challenges facing them. Edwin Dande, Managing Director Britam Asset Managers Ltd underscored the importance of Africa as the last frontier for investment and subsequent rapid economic growth. “There is need to uphold postponing of consumption for savings and investment as this is the only sure way the economy will experience growth,” said Dande. 

Amalgamated Chama Ltd  chairman Mwai Kihu says the way of forming ‘chamas’ is changing, supported by the global dynamics such as appetite for wealth creation and availability of investment opportunities.