Reasons Why Your Chama will fail

26 April, 2024 / Articles

Investment groups or chamas are created to empower individuals and improve their livelihoods. Many chamas always visualize being the next big thing. However, either most chamas collapse within 2 years, or the members become disgruntled because their goals are not being met. So, what are some of the reasons chamas fail?

  1. Lack of a Clear Investment Objective

Before forming a chama, members should have a clear strategy in mind as well as an investment plan. Failure to have a clear objective for the Chama will guarantee the failure of the investment group. Different members will come up with differing investment options that will ultimately lead to disagreements and eventually the chama will fail.

  1. Rushing into Investments

Research and due diligence are very important before venturing into any investment. Investing in a product that you don’t understand will lead to disappointments and the group can lose their money through Ponzi schemes. The investment group should be very wary of getting rich quick schemes.

  1. Not Investing Time in the Chama

Treat your chama like a business. Do you only check in on business once in 6 months? No, so why should you do that to your Chama?

  1. No Rules

The first order of business for any investment group is to clearly set operating guidelines. Inter alia minimum amount of investment, the deadline of contributions, exit plan for the members who would want out of the group at any one time are just some of the issues that should be foreseen and there needs to be a guiding framework on how to approach such situations. Without clear guidelines, some members might not give timely contributions or may skip making their contributions which will lead to the death of the group.

In conclusion, any chama can be the next ‘Tran century’ but you have to treat the group as a business. For the group to grow, every member must be willing to do the work. A Chama is all about teamwork and teamwork keeps the Chama stable.

RECENT BLOGS
Interview: Victor B. Ondiwo on Cytonn Young Leaders Program

Cytonn Young Leaders Programme (CYLP) is an intensive 12-week training and mentorship program which seeks to provide the vital work experience to fresh graduates just joining the job market. The pr...

Mortgage 101

A mortgage also known as a lien is a debt instrument usually secured against a collateral of a real estate nature. Payments made to offset mortgages are usually predetermined. Failure to commit to...

Factors to Consider When Investing in Real Estate

Real Estate is a dynamic sector that has proven to provide a hedge against inflation both locally and internationally. T...

Recent Articles

06 Jul

READ MORE

Why You Should Still Save For Your Retirement Duri...
Article by 1
Jul 6, 2020

18 May

READ MORE

Gender Diversi­fication in the Construction Indust...
Article by 1
May 18, 2018

15 Dec

READ MORE

What Makes an Entrepreneur'
Article by Michael Okinda
Dec 15, 2017
  • Talk to us
  • Kenya
  • P.O Box 20695 - 00200, Nairobi, Kenya
  • General Inquiries
  • Cell +254(0) 709 101 000
  • Tel +254(0) 20 3929 000
  • United States
  • +1 (240) 368-6217
    • Our Digital Platforms
  • Kenya
  • CySuites work spaces, Church Rd, Westlands, Nairobi, Kenya
  • USA
  • Suite 1150, 1775 Eye Street NW, USA, Washington DC 20006, USA
Privacy Terms of Use FAQs Whistle Blower Client Referrals
Top