A few days after Hivisasa published an article that was perceived to pour cold water on the economic sense of merry-go-round 'chamas', it has emerged that they have, some laudable level of economic sense.
Nelly Otieno, a consultant at Financial Inclusion in Africa and a pioneer of a savings group in Kenya, appreciates that the article tried to dig deeper into what goes on in the 'merry-go-rounds' and the effect at the household level.
While she agrees that some of them have no return on investment, she quickly notes that there are those whose structures are enshrined on giving gains back to the members, citing table banking and ASCAS Savings Group.
She says the major difference is in their operation in that some are just contributions made while the sound ones require a member to put in some savings which generate interest.
Otieno notes that a lot has been said of the merry-go-round, savings group and so on but, she says, it is popular and has helped many people.
"The working-class in Kenya have been coming together in the name of chamas- and these are actually investment clubs and in towns like Nairobi- they have bought plots and they are out for investments. Majority of these are women," Otieno offers.
As for ASCAS and Table banking, savings groups formed with the purpose of accessing credit, the consultant points out, make a lot of economic sense as members get to mobilize their savings and access credit from the same just like many employed people save in SACCOs and access credit.
"Women have taken their children to school, have invested in micro and small scale enterprises, and you have seen the growth of microfinance in Kenya, you have seen banks investing in women groups, towns and shopping centres have come up because of these women groups. There is employment created in the sector and all these make a lot of economic sense," Otieno observes.
A university student who requested not to be named says he enjoys the power of merry-go-round as it helps him save.
" I just joined a chama a month ago of 6 people and I'll be the 4th one to be cashed. Personally, this is a great strategy of saving when it's done by working people," he says adding "first of all, there's no initiative or investment without risks. Secondly, it's really hard to save money if you're doing it on your own and this is how the Chama comes in to get you committed to paying every month."
"Thirdly, when you finally receive all the cash, you can now save it on your personal savings account which you could not have been able to raise on your own due to lack of commitment and procrastination."
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