Chama Rules and Regulations: 28 Sample Rules for Kenyan Groups

Most chamas do not fall apart because of money. They fall apart because nobody wrote down what happens when a member pays late, misses three meetings, defaults on a loan or wants to leave. When the rules live in people's memories, every problem becomes an argument.

This guide lists the rules and regulations a chama in Kenya should agree on, with sample wording you can adapt. It works for merry-go-rounds, table banking groups, investment clubs and welfare groups. Agree on them at a meeting, record the decision in the minutes, and give every member a copy.

Why every chama needs written rules

• They settle disputes before they start. "What does the constitution say?" ends most arguments in a minute.
• They protect officials. A treasurer who follows written rules cannot be accused of favouring anyone.
• They are required for registration. A self-help group registering with the Department of Social Development, or a group opening a bank account, will be asked for a constitution or by-laws. See how to register a chama in Kenya.
• They make new members' expectations clear before they pay a single shilling.

Rules are usually split into a constitution (the big decisions: objectives, membership, officials, dissolution) and by-laws or regulations (the day-to-day amounts and deadlines, which change more often). Our chama constitution template covers the first part. The rules below are the second.

1. Membership rules

1. Who can join: "Membership is open to adults introduced by an existing member and approved by a two-thirds majority at a general meeting."
2. Joining fee: "A new member pays a non-refundable registration fee of KES 1,000."
3. Catching up: "A member joining after the group has started must pay the total contributions made by each existing member since the start, within six months." Without this rule, late joiners get the same dividend share as founders for less money.
4. Maximum size: "The group will not exceed 30 members." Smaller groups are easier to run; set the number before you need it.

2. Contribution rules

1. Amount and date: "Each member contributes KES 2,000 by the 5th of every month."
2. How to pay: "Contributions are paid only to the group paybill or bank account, never to an official's personal number." This one rule prevents more theft than any other.
3. Proof of payment: "A contribution counts as paid only when it appears in the group's records. Members keep their M-Pesa message as proof."
4. Late payment: "A contribution received after the due date attracts a fine of KES 200." (See our full list of chama fines.)
5. Persistent default: "A member who misses three consecutive contributions is suspended until they clear the arrears and fines."

3. Meeting rules

1. Frequency: "The group meets on the first Saturday of every month. An annual general meeting is held every January."
2. Quorum: "A meeting can make decisions only if at least two-thirds of members are present." Without a quorum rule, three members can make decisions for thirty.
3. Lateness and absence: "Arriving more than 15 minutes late attracts a fine of KES 100. Missing a meeting without an apology sent before it starts attracts a fine of KES 300."
4. Minutes: "The secretary records minutes of every meeting. They are read and confirmed at the next meeting."
5. Voting: "Each member has one vote, whatever their savings. Decisions are by simple majority, except changes to these rules, which need two-thirds."

4. Loan rules

Loans are where most chamas lose money, so be the most specific here. Our chama loan rules guide goes into detail.

1. Eligibility: "Only members who have contributed for at least six months and have no arrears may borrow."
2. Limit: "A member may borrow up to three times their savings."
3. Interest: "Loans attract interest of 12% a year, calculated on the reducing balance" (or whatever your group agrees; state whether it is flat or reducing).
4. Guarantors: "Any amount above the borrower's savings must be guaranteed by other members, whose savings are held as security until the loan is repaid."
5. Default: "A loan unpaid 60 days after its due date is recovered first from the borrower's savings, then from the guarantors' savings."
6. One loan at a time: "A member may not take a new loan until the current one is fully repaid."

5. Table banking rules and regulations

If your group lends at every meeting, add these to the loan rules. They are based on how most table banking groups in Kenya run:

• Everything collected at a meeting (contributions, repayments, interest and fines) is recorded and counted in front of members before any of it is lent out.
• Requests are handled in an agreed order: emergencies first, then members who applied earliest.
• Loans are repaid by the next meeting, or within an agreed number of months.
• Lending stops one or two months before the annual share-out so that all loans can be recovered.
• Interest earned is shared at the end of the cycle in proportion to each member's savings.

6. Officials and money handling

1. Officials: "The group elects a chairperson, secretary and treasurer at the AGM for a two-year term. No official serves more than two consecutive terms."
2. Signatories: "Any withdrawal from the group account needs two of three signatories, one of whom must be the treasurer."
3. Cash limit: "No official holds more than KES 5,000 of group cash for more than 48 hours."
4. Reporting: "The treasurer presents a statement of contributions, loans and the bank balance at every meeting." Members should be able to check their own balances at any time too.

7. Exit, death and dissolution

1. Voluntary exit: "A member leaving gives three months' written notice. Their savings, less any loans, fines and guarantees outstanding, are refunded within 90 days."
2. Expulsion: "A member may be expelled by a two-thirds vote for fraud, persistent default or misconduct, after being given a chance to respond."
3. Death of a member: "The savings of a deceased member are paid to their registered next of kin." Ask every member to register a next of kin when they join.
4. Dissolution: "If the group dissolves, assets are sold, debts are paid, and the balance is shared in proportion to savings."

How to adopt and enforce your rules

1. Draft them with two or three members, using the list above.
2. Discuss them at a full meeting. Rules that members argued over are rules they will follow.
3. Vote, and record the decision in the minutes.
4. Give every member a copy and keep the signed copy safe.
5. Apply them to everyone, including officials, from the very next meeting. A fine waived for the chairperson is a rule nobody else will respect.
6. Review them once a year at the AGM.

Frequently asked questions

Are chama rules legally binding in Kenya?

A registered group's constitution and by-laws are the agreement its members signed up to, and they are what officials and courts look at in a dispute. An unregistered chama's written, signed rules are still far stronger evidence than verbal agreements.

Can a chama change its rules?

Yes. Include a rule on how rules are changed, usually a two-thirds vote at a general meeting with notice given in advance, and record every change in the minutes.

What is the most important chama rule?

That money is only paid into the group's own account or paybill, never to an official personally. It removes the single biggest cause of losses.

Rules work best when the records are clear

A rule like "suspend members with three missed contributions" only works if everyone can see who has missed three. In ChamaPoint, contributions paid by M-Pesa post to each member's account automatically, officials record fines for lateness, missed meetings or late loan repayment, loans use the interest rate and repayment period you set, with guarantor pledges recorded against savings, and you can upload your signed constitution and meeting minutes so every member can read them. Each member sees their own balances, loans and fines.

Start a 7-day free trial and set up your group's rules in an afternoon. No card is required.