Chama App Qorus Banking Innovation Awards 2022

WHAT IS A CHAMA? Throughout Kenya, many rural communities do not have access to formal banking facilities found in urban areas, forcing this unbanked population to find alternative means to save their money effectively. A Chama is an informal group of people that come together voluntarily to pool their savings and collectively accelerate their wealth generation. This access to shared capital drives higher returns through collective investments and increases an individual's buying capabilities. Chamas also ease the fulfillment of the group’s immediate, recurring needs including education, business liquidity, and farm inputs - hence why Chamas are often referred to as “savings clubs”. They can also act as a source of credit as they are able to lend funds to members in need, providing a safety net in the event of emergencies or major life events, such as paying for a funeral. TYPICAL PROBLEMS CHAMAS FACE Chamas provide a useful solution to a lack of access to formal banking. However, due to their informal nature, they often lack structure, proper process, and effective management which can result in challenges for their members. Research by the Standard Bank Group (SBG) identified several challenges in this area of informal savings, including member mistrust, loan defaulters, poor record-keeping systems, and a lack of transparency and accountability in the management of the Chama. THE BIRTH OF THE CHAMA APP SBG identified an opportunity to provide a more formal and structured approach to solve these and other problems, by digitising the creation and management of Chamas – thus the Chama App was born. The App has excellent record-keeping functionality which provides real-time transparency and visibility of funds collected and dispersed thus improving accountability in the management of funds. Additionally, The Chama App eases the administrative tasks associated with Chamas such as coordinating and updating the monthly contributions, providing loan advances to members, and calculating interest charged and fines paid. The Chama Application marked the beginning of a digital revolution for these informal savings groups as it solved for their pain points and introduced them to new advanced ways of connecting with each other and recording their financial interactions.