How to Start a Chama in Kenya: A Step-by-Step Guide

Starting a chama is easy: a few friends agree to save together. Starting one that is still running, and still friendly, five years later takes a little more planning. Most of the problems that break chamas, such as unclear contributions, money held by one person, and no rules for loans or exits, are decided (or not) in the first two meetings.

This guide walks through how to start a chama in Kenya, step by step, from choosing members to your first contribution.

Step 1: Agree on why the group exists

Before anything else, agree on one main purpose. It decides almost every rule that follows.

• Save and take turns receiving a lump sum: a merry-go-round.
• Save and lend to members at interest: table banking.
• Pool money to invest in land, shares or a business: an investment chama. See chama investment ideas.
• Support each other in emergencies: a welfare group.

Many groups combine two of these. Our guide to the types of chamas in Kenya compares them.

Step 2: Choose the right members

The members matter more than the amount. Look for people who:

• Share the same goal and a similar ability to contribute.
• Have a reliable income, so contributions do not depend on luck.
• Can commit to the meeting schedule.
• Have a reputation for keeping their word.

Ten to twenty-five members is a manageable size for most groups. Registration offices usually ask for a minimum, often between five and ten.

Step 3: Hold a founding meeting

At the first meeting, agree on and record in minutes:

1. The group's name and purpose.
2. The contribution amount, frequency and due date.
3. Interim officials: chairperson, secretary and treasurer. See the duties of chama officials.
4. How and where money will be held, and who will draft the constitution.

Our chama minutes template shows what to record.

Step 4: Write your constitution and rules

Write down the rules before any real money changes hands. At minimum, cover membership and exits, contributions and fines, meetings and quorum, officials and elections, loans, welfare, how profits are shared and what happens if the group closes.

• Use our free chama constitution template for the structure.
• Use our 28 sample chama rules and regulations for the day-to-day by-laws.
• Set fair fines and penalties for lateness and missed payments.

Adopt them at a meeting, record the vote in the minutes, and have every member sign.

Step 5: Register the group

Registering as a self-help group with the Department of Social Development lets the group open a bank account and gives members protection. It is inexpensive. Our guide on how to register a chama in Kenya lists the documents and typical costs.

Step 6: Open a bank account and a paybill

Never let contributions go to an official's personal phone or account. Open an account in the group's name with at least two signatories required for withdrawals, and if you can, link a paybill so members pay with their member number as the account reference. Our guide to chama bank account requirements covers what banks ask for.

Step 7: Set up your records from day one

Decide how you will record every payment against each member before the first contribution arrives. At the very least, keep a register of contributions, loans, fines and welfare separately. Our guide on tracking chama contributions explains the options, from a register book to chama software.

Step 8: Collect your first contributions, and report back

At the next meeting, the treasurer should report exactly what came in, from whom, and the bank balance. Doing this from the very first month sets the standard for the life of the group.

Mistakes new chamas make

• Starting with money before rules. Disputes about the first loan are much harder to settle without written rules.
• One person holding everything. The treasurer should not also be the only signatory and the only record keeper.
• Contributions that are too high. Start with an amount every member can pay every month, and raise it later.
• Lending too early. Build savings for a few months before starting loans.
• No exit rule. Someone will leave. Decide now what they take with them.

Frequently asked questions

How many people do you need to start a chama?

There is no minimum for an informal group, but registration offices usually ask for at least five to ten members. Most chamas work best with ten to twenty-five.

How much should chama members contribute?

An amount every member can pay on time every month. Groups commonly start at a few hundred to a few thousand shillings a month and increase it as the group grows.

Do I have to register a chama?

Not to start saving together. But you will need registration to open a group bank account, sign contracts or buy property, so most groups register within the first few months.

Start your chama with clean records

ChamaPoint, our chama management system, gives a new chama everything in one place from the first meeting: members, contributions, shares, loans, fines, welfare and merry-go-round, with M-Pesa payments posted to each member automatically. Members see their own records on the ChamaPoint Android app, on the web or by USSD. Start a 7-day free trial. No card is required.