We formed a chama two years ago, but nothing happened in the first year, but when it took off finally last year, we have contributed money but we can’t agree on how to move as some want us to spend it partying and others want investment. I made the biggest contribution and want investment. Do you think I should quit?
As is well known, when the banking sector sneezes, the rest of the economy goes to ICU with pneumonia.
In Kenya, and specifically in the last few months, small and medium-sized enterprises (SMEs) have been starved of credit, a fact blamed on the low spread between deposit and lending margins. Typical to the nature of SMEs, many are high risk (in banking terms) but equally others have high returns. Banks argue that to be involved in these enterprises without adequate safeguards against potential failure of some of them is unrealistic. The interest cap puts low and high risk borrowers in the same basket.
With this background, we can now turn to your question, which reveals a number of fundamental flaws in the way you have put what sounds like a small enterprise in place.
Two aspects will illustrate this point. The first relates to the fact that for two years after forming a chama you did nothing. One of the many questions that then arise is, what does forming a chama mean?
Does it for example, mean that you went to a nyama choma joint with friends and at the end of heavy drinking made the declaration that a chama be formed?
In the alternative, did you meet at the home of one of the members and invite thel pastor to pray for the chama that you all felt would do well?
At the other extreme, forming a chama two years ago could be the end product of a series of consultations between a group of men and women.
In such a case, a person comes up with an idea that in his mind solves a particular problem in a particular sector of the economy. Having thought through the idea, the person calls a number of friends who examine not just the idea, but also review the opportunities that exist in the sector.
The second thread to your question relates to the philosophy behind your coming together.
On the face of it, it sounds as though you have elevated yourself to the high moral ground, from where you see partying as a negative activity. In some cases, it is and in some it has the benefit of causing families and the community to get together to create capital.
It is with this social capital that we help each other in times of hardship such as death and illness. Social capital is a good thing and has to be invested in. If one group thought along this line, while you wanted to make money, then the two of you belong to different boats.
It is, therefore, clear that you cannot work with the group that set itself up to build social capital while you invested to become a rich man.
All in all, therefore, it is worth your while to go back to the drawing board and investigate if you and your colleagues should be venturing into business together. If the answer is no, then you must quit.