"Chama”, " Merry-go-round", "table-banking" or whatever term you use to refer to it, has lately been under intense criticism and several have advised against it. It's major critics argue that chama does not earn you any income and it's some form of "dead capital" that would rather be put into good use... Others claim that it is unreliable and a party could disappear with money which is a financial risk and it's better to just store your money in the bank. They are right... but probably not so right.
If done well, chama can be a success story. In fact our mothers literally built our homes on chama. School fees was paid with chama money and our interiors have mostly been furnished with chama money. Contemporary chama users have purchased real estate, opened up service firms with chama money as capital or even invested in lucrative businesses. One success story I keenly followed was a team that bought matatus and took over the route plying a certain town.
If you're just leaving home to your first house, on your first job or may be just an ambitious student who wants to open up a business post school, here is why chama should not be entirely written off your good books:
1. It creates accountability
One major reason why I got into my first chama was accountability. In a chama, you almost have a round-the-clock bell reminding you that it's time to throw in your contribution. And my deiz some chamas are brutal! You might get fined! The thing about chama is that this is the beginning of the end of procrastination. The independence brought about by banks and Saccos are a luxury one cannot afford in a chama due to the strict timelines. The discipline it brings could also be useful in other financial areas including budget and planning, investing and borrowing.
2. It is a good avenue for saving
I don't know whether this only happens to me but whenever I have achieved a substantial amount of money that was meant for some goal, something usually more important comes up and takes away my savings, leaving me to begin from start. Can somebody relate 🤷♀️ almost always happens! Nowadays, even a lock savings account can be accessed instantly and funds withdrawn.
The rigid nature of a chama simply means that once you make a deposit, you'll have to wait your turn to get your cut. This is good way of ensuring plans are followed to the latter.
3. A good source of capital
If you are thinking of starting a business, buying a car, a house or furnishing your house without feeling the weight of cutting away your salary or taking a loan, this is probably one way you can plan for it. I mean, in the end, you're sure how long you'll need to save up for it and how much you'll need to top up if at all. What better way to live the soft life without feeling the pinch.
This is also a good way to bulk up your capital for shares or the money market fund.
4. Ideal for people with poor saving habits and extravagant spenders
Think about it. At the end of every period, you'll have to deposit some money somewhere and that means you'll not have a lot left to spend around. Win-win right?
So if you find the right group with like-minded persons and you want to, it's high time you follow your heart and begin sth worth the while. Remember every venture has risks and with the right risk analysis,you might break a ceiling.Try it and maybe leave a review.
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