Redefining Chama’s role in economic reforms
Individuals at any level of income can create wealth by saving and investing together as a group. There is a special dynamic within the structure – a combination of peer pressure, strength, confidence, and shared responsibility as an aggregator of capital and creator of wealth. Looking back at independence, Kenya was seen to be at par or ahead of several Asian nations. But 50 years later, these are established as developed countries, yet Kenya remains ranked in the Third World country bracket. Myriad reasons` account for the difference.
Disjointed local development projections have triggered variances. However, one valid factor, which deserves mention, is the tendency and culture of making savings in Asia, which far exceeds levels locally. Currently, Kenya is caught up in the consumerism and materialism era, to an extent adopted lifestyles fuel negative consequences. Investment groups require people with an ‘investor’s’ mind though the term ‘investor’ is often associated with foreigners.
Widespread assertions suggest past governments hardly focused sufficiently on the promotion and protection of local financiers hence continued dependence on foreign investors. But as microfinance banking expert, Lydiah Maina points out; time is ripe for Kenyans to embrace internal resource mobilization as a way to grow the economy. She notes that “through pooling resources together in investment groups (chamas), Kenya can stop depending on foreign aid for economic development”.
Lydiah asserts that scores of people’s lives are transformed through investment groups hence the need to borrow from this idea to impact in the growth of Kenya’s economy. Investment clubs have emerged as avenues to restore and promote a culture of saving that nurtures potential local investors. Top of the league success by Trans-Century and Centum group of companies, reflects the sheer potential of investment ventures. entities.
Other challenges range from professional records and book keeping to facilitating efficiency and transparency in running group operations.
The impact of chamas in the economy’s growth can be strengthened by financial institutions introducing products that help investment groups advance their visions. Besides access to funding, Lydiah explains that chamas require capacity building to enable members gain knowledge on investment guidelines.
Lydiah further notes that development strategies aimed at spurring Kenya’s economy ought to shift to people at the bottom of the economic pillar as they constitute of 65% of the population. In Africa, the option to retire is not enviable as many state and private retirement schemes are totally inadequate beyond a couple of post-retirement years.
Yet, if well managed, investment groups offer a viable retirement plan opportunity. With the population surpassing phenomenon could be said to be the “social cure” for broad based wealth creation especially in Kenya and other developing economies in Africa.
By Mwendwa Kitheka