After graduating from Jomo Kenyatta University of Agriculture and Technology, five students joined hands to form a savings scheme where each contributed Sh5,000 a month.
Computer scientists Samuel Njenga and Joseph Mwaniki as well their three colleagues completed their studies in December 2002 and graduated in March 2003. They resolved to start the savings scheme as a way of getting in touch. They never however anticipated that this decision would end up becoming a serious venture that is now worth about Sh500 million.
“We each went different ways but maintained contributions to our group (chama) investing the funds in stocks at the Nairobi Securities Exchange,” says Mr Njenga, who is the managing director of Itrade, the company they later set up.
“After a two-year stint, we raised Sh800,000 after disposing our shares and bought two plots at Membley area in Kiambu County.”
They continued making monthly contributions while working for different public and private companies with five more members joining the group along the way.
Mr Njenga says they disposed the two plots for “a handsome profit” and re-invested the funds into their next project where they bought a one-acre plot in Kitengela, Kajiado County, which they later subdivided into 10 plots and sold them. They then bought another parcel of land which they sold in a year.
Mr Njenga first worked for Telkom Kenya before taking up a new role as system administrator at the Ethics and Anti-Corruption Commission where he worked for nine years.
“As the business grew, we realised remote owner-managed model of management cannot work. We registered Itrade company and opened an office. I was requested to take up the role of MD while my long-time friend, Mr Mwaniki took up the finance director’s role,” he says.
With proper management structure in place, he says they were now able to make prompt decisions on day-to-day running of the firm while major decisions, such as on purchase of land and injection of funds for new projects, are made by the board.
Itrade ventured into house development after being tasked by a client living abroad to oversee construction of a single housing unit. When they successfully executed the project, they resolved to form a construction company.
This is also the time they decided to incorporate more members with expertise in various areas of their businesses.
“We realised we lacked various experts in the construction sector to offer professional advice for our real estate investment. We brought in an interior designer, a banker, two auditors and an accountant,” he says.
The first biggest project they undertook was building their first gated community with six maisonette units at Ruiru, named Itrade Gardens. This saw them rake in good earnings.
The success of the project and the attractive earnings whetted their appetite for even more real estate projects. They sought loans from the Kenya Commercial Bank Group and HF Group to put up two other estates that sold off during the construction stage prompting a board resolution to transform the land buying company in 2015 to a housing developer.
The firm has been rapidly growing since then. It now has 20 permanent employees and hire more on temporary basis depending on the amount of work they have at a particular moment. Currently they have about 100 temporary employees working on various projects.
Mr Njenga says chamas can be strong economic vehicles that if nurtured well, could grow to earn members handsome returns while creating employment for Kenyans.
“What people lack is patience and trust. Get the right synergy within members and always listen to every member’s contribution in terms of ideas,” he says.
“The members’ focus should be on realisation of the agreed strategic goals.”
Itrade has also brought in three other shareholders — an architect, an electrical engineer and a structural engineer.
Mr Njenga says they tap into the diaspora community through one of their shareholders living abroad. Her role, he says, is to engage Kenyans living abroad on the need to invest at home and provide them with information on investment vehicles.
Their turnover in 2006 was Sh500,000. By 2010 this had gone up significantly to about Sh15 million, buoyed by their sale of assets. Incorporation of a hardware business saw their turnover hit Sh100 million in 2012. By 2015, they had grown their revenues to Sh250 million.
“In the 2016/2017 period we realised a Sh400 million turnover and are eyeing to hit the Sh1 billion mark in our next growth period,” says Mr Njenga adding that they are soon breaking ground for two new projects in Ruiru and Kinoo worth Sh450 million next year.
Mr Njenga says that for a chama to attain its goals, it must avoid petty wrangles and focus on the big picture.
“Know when to change tack to reduce expenses and attract new income. Work to grow the business for long-term gains not short-term gains,” he adds.