Self-help groups, or simply chamas, are Kenyan colloquialisms for investment groups, which have been, for the longest time, a sure path to financial freedom.
The most important thing for retirees investing in self-help groups is that they are the closest access and safest way to benefit from the investment. With this investment option, senior citizens can effectively earn interest on their savings and increase their wealth without losing their hard-earned money.
Investing does not need to involve saving large sums of money. You can earn money on your initial investment plus all the accumulated interest from previous periods.
While everyone should be investing, each person has a different investment strategy that fits their personal and financial goals. Previously, chamas were considered an older women’s affair, but this has evolved as we now see more engagement in self-help groups.
Analysts have observed that these groups enable persons from varying income brackets to face difficulties and opportunities as a group instead of as individuals.
Chamas enable people to maintain and develop their resources by encouraging saving and making available lump sums that can be used for small-scale investments or household needs- school fees and so on.
In this way, they make money ‘work’ because small amounts can be contributed and made available to everyone for welfare or investment needs.
Dividends being the key live-off in retirement, they involve the distribution of a group’s earnings to its shareholders and are determined by the group. Dividends are often distributed quarterly and may be paid out as cash or reinvestment in additional investment.
The shareholders must approve dividends by voting rights. Although cash dividends are common, dividends can also be issued as shares of stock.
Chama Investment Loan is a specially-tailored loan facility to make funds available when viable group projects have been identified so that your Chama can take advantage of saving for investments in viable group projects.
Information required for registering a self-help group may include the following;
- The Chama must have Articles of association and Memorandum of Association documents in place as these are vital requirements for registering a Chama.
- The objective of the company and the activities to be conducted by the business.
- Full names. Your full name’s, as displayed on your ID/Passport, will be used on the application.
- Full names of the Directors if different from the shareholders.
Postal addresses. Email and telephone details of the shareholders and directors. - Number of shares for each stakeholder
- Copy of the national ID/passport of the investors and directors. Photos – must have a clear background and show all your facial features, just like a passport photo.
- A copy of KRA PIN certificate for all the members and directors.
You need ten or more members to register for the Chama group. - Your Chama must have a constitution that guides its activities and membership directives, including how to nominate officials.
- The group should have by-laws or a constitution that guides its activities and dictates its membership, including the officials. Ensure that your constitution indicates your objectives.
How to register a self-help group in Kenya
Self-help groups can be registered with the Ministry of Gender, Children, and Social Development in two main ways.
- Registration as an association or as a Self Help Group
- Certification as a Limited company or Partnership
If you need to formalize a Chama as a limited company or Partnership, the group has to perform a name search on eCitizen or at a nearby Huduma center at the cost of Ksh 150.
To save time, one must submit at least three names at once in case any of the names are already taken by others.
When successful, the business name is reserved for 30 days, during which the Chama can then register the business name.
After this, all the requirements for registering a limited company or Partnership apply.
