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Chamas need to think beyond land when investing

By Kagure Gacheche | August 25th 2016

Kenya has an estimated 300,000 chamas that control close to Sh300 billion, a remarkable achievement by any standard.

These chamas have the potential to change the fortunes of generations to come, but only if they challenge themselves to do the extraordinary.

A few weeks ago, Unaitas Sacco concluded its chama competition, which offered a treasure trove of lessons for groups. The competition attracted more than 1,000 chamas, which were shortlisted to 14. Kabati Pork, an investment group that runs a pork abattoir in the Kabati area north of Nairobi, was the winning group.

Anecdotal evidence suggests that Kabati Pork and runners-up like Fiorente Divas are not accurate representations of the average Kenyan investment group.

From the entries submitted, it seems that the perceived preferred path to prosperity for chamas is purchasing plots of lands, mostly in satellite towns that have lower land prices, and then flipping this land at a future date, ostensibly when prices have risen.

Viable sectors

While there is nothing wrong with this approach, there are other viable sectors of the economy that offer opportunities for chamas but are often overlooked. These are some of the lessons chamas should keep in mind.

Start small: Most chamas come together often with lofty dreams and business ideas. They believe they can only do big projects or businesses because they are in a group, so a lot of time is wasted thinking and planning for huge projects, forgetting the old wisdom of starting small

Learn proper business practices: Chamas believe they can get into business without knowing the basics. In the end, they become frustrated and even disintegrate because of a lack of knowledge and congruence on what to do to be successful.

Leadership management and development matters: Just as with business basics, leadership is also an issue often overlooked. The point of origin of most investment groups is social, and as such, a lot of camaraderie is prevalent in their dealings, with the original group of mobilisers retained as leaders irrespective of their skillset.

Enjoined by diversity but separated by prosperity: Most groups come together focused on tackling a challenge or problem, and this brings them together and gives them a common agenda. However, once they begin to prosper and overcome the original problem, their prosperity becomes a source of problems, with interests, goals, and objectives changing and making the group’s sustainability difficult.

The chamas that made it to the final stages showed that agribusiness, food processing and education are some of the industries chamas can and should invest in as sustainable business models.

A good example is the meat industry, which produced the winning investment group. Kenya’s rapidly urbanising and young population will need a constant and large supply of meat, presenting a golden opportunity for chamas.

A report on Kenya’s meat sector prepared for Dutch businesses found that beef, chicken, mutton and goat meat consumption will more than double over the next two decades for the aforementioned reasons.

Dissecting the meat industry further, the report shows that there are opportunities in deboning, slaughtering, packaging, vet services, animal feeds, cold storage, transportation and other processes along the value chain, which chamas can invest in.

Looking at value addition possibilities in education, transport, energy and other sectors, it is clear that there are major opportunities for chamas that are yet to be exploited.

In addition to earning dividends, such investments would create jobs, contribute to Government revenue and give much-needed support to the ‘Buy Kenya, Build Kenya’ policy.

For chamas to seize these opportunities, however, they must be willing to invest resources, including time to carry out thorough research.

The importance of research cannot be overemphasised. It allows chamas to spot opportunities, as well as identify threats. Chamas can additionally package their products and services to best serve the market as they keep track of what is happening in the industry.

The writer is CEO Unaitas Sacco Society. [email protected]


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