Ten friends in Embu agreed on KES 1,000 a month each, and then spent a whole evening arguing about what to do with it. Half wanted a turn at the full pot, a few wanted a lump sum in December, and two wanted to be able to draw on the money for their shops. Each wish was reasonable, but each one called for a different set of rules. They were all describing different types of chamas in Kenya, without having names for them.
The model you choose shapes everything: when members see money, how much trust the group needs, and what can go wrong. Each main type gets its own section below, covering how it works, who it suits and where it goes wrong. Further down, the same ten people and the same KES 1,000 go through three of the models, so the difference shows in shillings.
Merry go round: a turn at the whole pot
In a merry go round, every member pays the same amount on the same schedule, and one member takes the entire collection each round. The order is set in advance, often by ballot, and the cycle ends when everyone has had a turn. Over a full cycle, every member takes out exactly what they put in. Then the group either starts again or closes.
A merry go round suits people who want a useful lump sum at a known time, such as for stock, rent or a household item. In Embu, it was the choice of the half who wanted a turn at the full pot. It needs little record keeping and no shared fund, because the money moves straight to the recipient. Nothing sits in an account waiting to be managed, so there is little for an official to get wrong.
The weak point is trust after the payout. A member who collects early and then stops paying leaves later members short, so order and member selection matter a great deal. Placing new members last in their first cycle means they have paid in fully before they collect. Early turns are also more valuable than late ones, so the order must feel fair.
Savings and share out: a lump sum at year end
In this model, members save all year and nobody takes the pot. At an agreed date, usually late in the year, the savings are divided by what each member contributed. Many groups time it for December spending or January school fees. This was what the Embu friends who wanted a December lump sum were asking for.
A savings and share out group suits members who struggle to save alone and want a disciplined, forced lump sum. Nobody can quietly spend their contribution in March, because it is no longer in their pocket. Because the money stays in the group all year, it needs strong records and clear rules about where the money is kept and who can move it. Every member should be able to see the balance as it grows.
The risk is concentration: a large sum sits in one place for months. In the Embu example, the pot would reach KES 120,000 by December, all of it in one place. Good rules on handling money, which are central to how to run a chama, matter most for this type.
Chama fund support (table banking)
In this model, members save into a shared fund, and any member can ask for support from it. The member returns the amount plus a small chama processing fee, charged once on the amount, in equal monthly parts. The fee stays in the fund, so it belongs to all members and is shared at year end. This is what the two Embu friends with shops had in mind.
Chama fund support suits groups of traders, farmers and small business owners who need working money during the year. It keeps the group's money working for members rather than sitting idle. A trader who needs stock in March does not have to wait for December or for a turn in a rotation. Members who never use the fund still receive their savings at year end, along with a share of the fees.
Chama fund support needs the most discipline of any type. Members must return what they take on schedule, the group needs a limit on how much one person can request, and every request should be approved by members, not by one official. If one member fails to return what they took, every member's share out is smaller. That is why many groups add it only after their records and rules have been tested.
Welfare group: standing together in hard times
A welfare group, or a welfare kitty within another chama, collects small regular contributions to support members facing funerals, hospital bills or other emergencies. Payouts follow written rules on what is covered and how much. Almost every chama benefits from a welfare kitty alongside its main purpose. It turns a savings group into a community that shows up when life is hard.
The challenge is fairness: deciding what counts as an emergency and keeping the kitty from running dry after a bad month. A short written list of covered events, with a fixed amount for each, means nobody has to negotiate while grieving. Clear rules and a vote on each payout solve most of this.
Investment chama: owning something together
An investment chama pools savings to buy assets together: land, a building, a business, or shares. Members own the asset jointly and share any gains or losses. It suits groups that plan for the long term, with steady contributions and patience.
An investment chama also carries real risk. Land deals can turn out to have problems with ownership, businesses can fail, and share prices can fall, so the group can get back less than it put in. Money tied up in land or a business also cannot be shared out quickly if members need it. Past gains on any asset do not promise future ones.
Before any investment, the members should agree by vote, understand what can go wrong, and get proper advice. A decision pushed through by a few keen members can leave the rest owning something they never wanted. For land or property, ask a lawyer to check the ownership documents before any money changes hands. Taking time over the decision costs far less than undoing a bad purchase.
Same ten people, three models: an example from Embu
The same money produces very different years under different rules. Ten friends paying KES 1,000 a month put KES 10,000 into the group every month and KES 120,000 over the year. What changes between the models is when each member sees that money and how much trust it takes. Here is what the ten friends from the opening would experience in one year:
| Model | What happens during the year | What each member has by December |
|---|---|---|
| Merry go round | Each month one member takes KES 10,000; the cycle ends after 10 months | Each received KES 10,000 once, at their turn |
| Savings and share out | Nobody takes money; the pot grows to KES 120,000 | KES 12,000 each at the share out |
| Chama fund support | In month 3, one member takes KES 20,000 for her shop, with a 5% chama processing fee of KES 1,000 set by the members, and returns KES 21,000 in five monthly parts of KES 4,200 | KES 12,100 each at the share out, since the KES 1,000 fee is shared |
Two details in the table need a word of explanation. In the merry go round, months 11 and 12 start a new cycle or pause, as the group agrees. In the Chama fund support version, everyone, including the member who used the fund, receives a slightly larger share out because the fee stayed with the group. The extra KES 100 each is the KES 1,000 fee divided among ten members. It is small, and it depends entirely on members returning what they take.
None of these is the best. The merry go round gives an early lump sum to some, the share out gives everyone a December lump sum, and Chama fund support gives working money to those who need it during the year. Each one matches one of the wishes voiced on that evening in Embu. The right choice depends on which need matters most to your members.
Choosing and combining types
Ask three questions as a group. When do members need money: at a turn, at year end, or whenever business calls? How much do members already trust each other? How much record keeping can your officials manage?
Many Kenyan groups combine types. A common setup is a monthly contribution split between savings for a year end share out and a small welfare kitty. Another is a savings group that switches on Chama fund support once its records and rules have been tested for six months. The Embu friends could have settled their argument in a similar way, with savings for December and fund support for the two shops.
Start simple. A group that begins with one clear model and adds others by vote is far more stable than one that tries everything in its first month. Each new model brings new rules, and members need time to learn one set before taking on another. A first year of plain saving also builds the records and trust that every other model depends on.
Every type on Nyanyuka
Several of these models are built into a Nyanyuka chama. Members contribute from their own savings, and every payout, release or rule change is decided by member vote. The chama can keep a welfare kitty, where a payout to a member in need passes by vote, and a year end share out divides the pot, less what members agree to keep, by what each contributed. Those features cover the savings and share out model and the welfare kitty described above.
The other types work on Nyanyuka too, each in its own way. Chama fund support can be switched on by the chama, with the chama processing fee staying in the fund. There is no automatic rotation for a merry go round: a group that runs one keeps its order in its constitution, and each round's payout passes by member vote like any other. Chamas can also invest together in NYSE shares by vote, where prices can fall and members can get back less than they put in. See how Nyanyuka works for the details of each.
Go deeper
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KES 200 a month from each of 25 members in Kericho paid for two funerals and three hospital stays, and still left KES 20,000 for the next emergency. How to set contributi...
Frequently asked questions
Which type of chama is best for beginners?
A simple savings and share out group, or a small merry go round among people who know each other well, is easiest to start. Both need few rules and little record keeping. Add Chama fund support or investing later, once the group has a track record. Starting simple gives the group a year of records and trust to build on.
Can one chama run more than one type?
Yes, one chama can run more than one type, and many do. A common mix is monthly savings for a year end share out plus a small welfare kitty. Decide by vote how each contribution is split, so every member knows how much goes where. Keep separate records for each part so money from one does not quietly cover the other.
What is the difference between table banking and a merry go round?
The difference is who receives the money and when. In a merry go round, the whole pot goes to one member each round in a fixed order. In table banking, which we call Chama fund support, members save into a shared fund and request support when they need it, returning it with a small processing fee. The fee stays in the fund for all members.
Is an investment chama risky?
Yes, an investment chama carries real risk. Land, businesses and shares can all lose value, and members can get back less than they put in. For land, have a lawyer check the ownership documents before any money changes hands. Agree by vote, take proper advice, and never invest money members will need soon.
Ten friends in Embu, KES 1,000 a month each, and three very different years depending on the rules they pick. How each kind of Kenyan chama works, who it suits, where it goes wrong, and how groups combine them.
Try the chama type that fits your group →