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Local investment groups popularly known as ‘Chamas’ are playing an increasingly visible and crucial role in the economy and as such need to adopt modern investment practices.
Two top financial executives have advised such investment groups to seek professional support in identifying and exploiting emerging economic trends and opportunities. This, they explained, will not only help them efficiently manage risks but also maximize wealth creation for their members.
Bank of Africa Kenya, Managing Director, Kwame Ahadzi, said some ‘Chama’ groups were now making multi-million shilling investments and could no longer be considered small, informal organizations as commonly perceived.
“We are seeing a trend whereby many ‘Chama’ groups are graduating into large investment vehicles. They can no longer rely on informal or trail-and-error approaches to investment but require strong financial partners,” said Ahadzi.
The MD urged ‘Chamas’ to put up formal structures as a way of strengthening their management systems and ensure those entrusted with members’ wealth can be held accountable for their decisions and actions.
James Mworia, CEO, Centum Investment Company, has urged ‘Chama’ groups to tap into financial expertise available locally in order to come up with sound investment models as this was the only way to maximize returns for their members,” he said.
They were speaking at a training seminar co-hosted by Bank of Africa Kenya and Centum Investment Company Limited at a Nairobi hotel for BOA’s ‘Chama’ customers. Over 300 customers belonging to various ‘Chamas’ based in Nairobi, attended the seminar.
Mworia, who delivered a talk entitled “How Chamas can enhance their investment practices to maximize wealth creation for their members,” said that as ‘Chamas’ grow their investment portfolios, prudent and ethical management practices become imperative to their success and survival. He added that good corporate governance is pre-requisite to successful investment.
BOA Kenya was among the first banks to spot the immense opportunity in ‘Chama’ groups. In 2010, it launched the successful ‘Chama’ product which has generated substantial growth in deposits for the bank. One of the benefits that ‘Chama’ customers enjoy is free financial and investment advice at workshops organised by the bank.
The bank has in the past hosted such workshops in Nairobi. It plans to scale up its ‘Chama’ training engagements by hosting these in other major towns across the country.
Centum regularly partners with investment and financial groups and institutions in promoting financial literacy among Kenyans.
Most ‘Chamas’ in Kenya initially started as small, informal investment groups targeting investment opportunities mostly in real estate. The ‘Chama’ tag denotes the social nature of these groups most of which were initially women’s groups. They have since evolved to become ubiquitous investment vehicles, in some cases, large companies with a footprint in many sectors of the economy.
Are you in a Chama? Are you happy with level of Financial Management being carried out in your Chama?
Photo Courtesy of financial-expert.co.uk
