Quick answer: A chama is a group of people who save together, lend to each other or invest as a group. To start one: agree the purpose, write a simple constitution, choose officials, open a group bank account with at least two signatories, and keep written records. Registering as a self-help group (at the sub-county social development office) lets you open the account in the group’s name; guides put the fee at about KSh 1,000, but confirm locally.
Types of Chamas
| Type | How it works | Good for |
|---|---|---|
| Merry-go-round | Everyone contributes; one member takes the pot each round | Lump sums for household needs |
| Savings and lending | Contributions build a fund that lends to members at interest | Emergencies, small business loans |
| Investment chama | Pools money to buy assets: land, securities, a business | Long-term wealth |
| Hybrid | A mix of the above | Most groups |
Step-by-Step: Starting a Chama
- Gather 5–15 people you trust, with similar goals and income patterns.
- Agree the purpose, monthly contribution, meeting schedule and penalties.
- Write a constitution: membership, contributions, loans, exit, disputes, investment decisions.
- Elect a chairperson, secretary and treasurer.
- Register as a self-help group with the social development office (requirements and minimum members vary; ask your sub-county office).
- Open a group bank account with at least two signatories required for every withdrawal.
- Keep minutes and a contributions register from day one.
What to Put in Your Constitution
- Contribution amount, due date and late fines.
- Loan rules: limit, interest, repayment period, guarantors.
- What happens when a member leaves or dies (refunds, nominees).
- How investments are approved (for example two-thirds vote).
- How officials are elected and replaced.
Record Keeping and Chama Apps
Use a spreadsheet or a chama app that records every contribution and loan, and share statements monthly. Whatever tool you choose, the bank statement is the final record. Never let all the money sit in one person’s M-Pesa.
What Should a Chama Invest In?
- Short-term: a money market fund or {shn("treasury-bills-in-kenya", "Treasury bills")} while you save up.
- A business that earns every day, such as {htlink("water-vending.html", "a water vending point")} or {htlink("blog/milk-atm-business-plan-kenya.html", "a milk ATM")}.
- Land: only after checking the title at the lands registry and with a lawyer.
Avoiding Chama Conflicts
- Write everything down and read minutes at the next meeting.
- Rotate who checks the bank statement.
- Do not mix family loans with chama money.
- Avoid investment "opportunities" that promise guaranteed returns ({shn("pyramid-schemes-in-kenya", "pyramid scheme warning signs")}).
Stay safe: never pay a "registration", "activation" or "withdrawal" fee to get paid, and never share your password or M-Pesa PIN. Real online income comes from people paying for your content, products or skills.
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Frequently Asked Questions
How do I start a chama in Kenya?
Agree a purpose and rules, write a constitution, elect officials, register as a self-help group and open a group bank account.
How much does it cost to register a chama?
Guides put the self-help group fee at about KSh 1,000; confirm at your sub-county social development office.
How many members does a chama need?
Requirements vary by office; many guides say at least 10 for self-help group registration.
What should be in a chama constitution?
Contributions, loans, exits, investment approvals, elections and dispute resolution.
What is the best investment for a chama?
One the group understands, with real income or a licensed manager; avoid guaranteed-return schemes.
Can a chama get a loan?
Registered groups with good records can borrow from some banks and SACCOs.
Cover photo: Women at a community group meeting with a cash box on the table. Photo: Climate, Livestock and Markets (CLIMARK) project by CTA-EU, CC BY-SA 2.0.
