Let me point out two errors in the title of this post. First, the plural of chama in Swahili is ‘vyama’, not ‘chamas’ like English speakers say. Second, the term self-help group is a “development-friendly” way of describing a chama, but in fact chama means ‘association’, ‘club’ or ‘party’ which can be involved in all kinds of activities. In the past I enjoyed using exotic terms like ‘indigenous’ (or ‘endogenous’) institutions in my papers but I realized that, whether I like it or not, they tend to indicate some sort of backwardness. So, I started calling them “social networks”, like sociologists do, but I’m still not convinced.
Vyama are widespread all over Kenya and deeply embedded in the local culture, probably because they allow members to face problems and opportunities as part of a group rather than individually. This is quite a difference from the individualistic environments where I grew up (hint, it’s in Europe), where I may count on my immediate family members and friends in some occasions, but in general people rely on markets and formal institutions for almost everything. Vyama instead seem to work for the exact opposite reason: because they are flexible and informal and because they are built on social ties instead of formal structures. I should point out that vyama do get some sort of government recognition, as they usually register as Community-based Organizations (CBOs) at the Ministry of Gender, Children and Social Development but this doesn’t make them a legal entity. In very rare occasions, vyama are registered at the Attorney General’s office as private enterprises, partnerships or societies, but this happens only if the chama makes profit or large-scale investments.
What do vyama do?
Because of their flexible and informal nature, vyama are extremely difficult to categorize in simple groupings. Though, since this is a blog and I can over-simplify things, I would divide them in four main categories: (i) financial, (ii) investment (iii) welfare (iv) regulation.
Financial vyama are by far the most common. You’ll find them in the literature under the name of ROSCA, ASCA, merry-go-round or saving club. Members meet regularly and put money in a common “pot”. The sum is then given to one of the members on a rotating basis (a la ROSCA) or is given as a loan with interest (a la ASCA). A growing type of chama are the so-called “investment clubs”, which are vehicles for investments usually in land, the stock market, or in new businesses ventures. Welfare clubs are also extremely common in Kenya; they usually operate as informal safety nets and help members in case of emergencies, funerals or other type of financial shocks. Finally the “regulatory vyama” are associations that operate in specific locations (i.e. a neighborhood, a market, etc.) and set a number of internal rules.
Now, the readings:
Probably one of the most comprehensive accounts of chama groups written in Kenya is the recent book by Mary Njeri Kinyanjui called “Vyama: Institutions of Hope” (disclosure: I work with Mary at the University of Nairobi). The book looks at the role of vyama in learning and education, investment, redistribution, social protection and socio-economic development. She also wrote a paper in 2010 (freely available here) which I strongly recommend.
If you are interested specifically in the financial role of chama groups at the household level, then you should read the papers by Susan Johnson (from 2004 and 2012, both PDFs), which show the complex landscape of formal and informal financial providers in Kenya. The organization called FSD-Kenya has collected a wealth of data on this issue as well. For more info check out the nationally-representative Finaccess surveys conducted in 2006 and 2009. The 2012 survey should come out over the next months (disclosure 2: I am also collaborating with FSD, but on a different project).
Finally, if you want more info on investment chama groups, there is an interesting manual written by the “Kenyan Association of Investment Groups – The Chama People” (KAIG) which gives suggestions about registration of chamas, internal regulations, type of investments and lots of other things. I noticed just now that KAIG recently changed policy and you need to register in order to download the “Chama handbook”. That’s quite annoying, but if you are a University student you can register for free here.