Beware of embracing too many ‘chamas’

By JOHN KARIUKI

With the runaway inflation and higher interest rates charged on loans by commercial banks, financial fulfilment is changing.

People are turning to Savings and Credit Cooperative Societies (Saccos) and association commonly known as Chamas for financial support.

In deed, there has been an explosion of pyramid schemes and Chamas even in up market workplaces. People , where people previously deemed not to be bothered in pooling their resources in rotating funds.

But among the subordinates and small to medium businesses, Chamas are the rule rather than exceptions. They are a way of life. But the ease with which they disburse cheap credit and their policy of “non-probing” in one’s existing money obligations can be a disaster in the making.

Money goals
Scores of people are spreading themselves too thin with membership to a multiplicity of Chamas.
They are literary working for these cyclical funds without anything to show or financial reserves to undertake other money goals!

Ms Joyce Njagi, a city trader, regrets joining many Chamas. They have been eating into her business capital, leading to a serious cash flow problem. “I was a member of three Chamas in which I would contribute Sh2, 000, 1, 000 and 500 every month,” she says. The cycles of these Chamas varied from eight to ten months and she had no problem.

She joined many new Chamas with the hope of more gains. “I joined four more Chamas because they focused members on saving for specific issues that many people often overlook,” says Njagi. 

Njagi’s subscription fees to some Mtaani Chamas were quite small, amounting to as low as Sh50 daily. “But my business began doing badly and profits dimmed,” she says.

They drained her resources. A quick look at her business records revealed that for the last few years, she had been making a profit of Sh3,000 per month. Njagi has since cut down her Chamas to two
Boaz Chengo, a civil servant has saved itself the mess by avoiding extra commitments.

“My salary was no longer enough and I would frequently skip the monthly contributions to some Chamas, incurring fines,” he says.   Chengo advises people to prioritise on what increases wealth creation.