Nairobi, Kenya – Inside the rented workshop in West Nairobi, bright scraps of fabric lie on every available surface, and colourful dresses adorn the corrugated walls.
The space, equipped with three sewing machines, belongs to Irene Obahiambo, a businesswoman who designs and makes clothes to sell to local residents through WhatsApp.
She is one of many Kenyans, mostly women, who use chamas – self-organised groups for saving, lending and borrowing money.
“I am a fashion designer and want to boost my business,” says Obahiambo, who wears one of her own black dresses, emblazoned with red floral patterns. “I can use the chama to get money even when I’m broke.”
Her group is Chama Wezadada (Able Women Chama), who practise various methods of both saving and lending money. Meeting in a dim backroom in Kawangware slum, they tell Al Jazeera the cash most often goes to support their children and businesses.
In Kenya, stable jobs are scarce.
Seventy-seven percent of the population is estimated to be employed in the informal sector, and half of them are women according to a 2012 report by the Institute for Economic Affairs (IEA).
The World Bank says 35.6 percent of Kenyans lived on $1.90 or less between 2015 and 2016.
We don't want to depend on our husbands, we want to help ourselves.
Chamas are used by 41 percent of Kenyans, according to Financial Sector Deepening, Kenya (FSD Kenya), an organisation working to promote financial inclusion in Kenya.
They originally arose from women’s labour groups, says Amrik Heyer, head of research at FSD.
“Chamas are a phenomenon generally associated with the rise of the capitalist economy and commodification,” she says.
The groups are rooted in community relations – Chama Wezadada expanded by word of mouth – and are highly dependent on trust.
The groups can simultaneously offset risk more cheaply than commercial loans, and also provide support to members, Heyer explains.
She says: “For women, social capital is the biggest and most important asset that they can leverage, and they have maximised that asset to get access to credit.”
Financial inclusion, particularly for women, is crucial to economic growth and a key aspect of the Sustainable Development Goals, a set of international targets established to dramatically reduce poverty by 2030.
Banks are difficult for low-income people, such as the women of Chama Wezadada, to access for a number of reasons.
“Most of these women fear the bank procedures,” says Ann Mamboleo, who collects data for FSD and has worked closely with the group. She adds that Kenyan banks often require a guarantor for loans, or must see a payslip, unavailable to those in the informal sector. Mistrust of banks is also high, especially among those with less education, says Mamboleo.
“For them, it becomes a hassle,” she says. “With these chamas, you don’t have to do that.”
In contrast, the women of Chama Wezadada say the group provides social support and helps give them independence, so they are able to be more self-reliant and pursue work opportunities.
Being able to work for themselves and easily access sizeable loans in a lump sum also means the group’s members, 15 in total, are able to pay for their children’s school fees.
“It helped so much, my daughter has now finished secondary education,” says Obahiambo, the dressmaker, explaining that the chama’s money “cleared the school fees”.
Chama Wezadada meets every week to loan or save money. When Al Jazeera visits, the women are using a “Merry-Go-Round” system to collect savings.
After an opening prayer, Miriam Okungu, the chama’s elected chair, collects 150 Kenyan shillings ($1.45) from each member as she calls their name.
In addition, the group also does “table banking”, loans of up to 30,000 Kenyan shillings($295) to members who need it. This is repaid after a year, plus interest, to be distributed among the chama.
Interest rates for loans vary across chamas, usually from 10 to 30 percent.
Wezadada charges 200 Kenyan shillings ($1.96) per 1,000 Kenyan shillings ($9.81) on loans.
While large, it means that on repayment members profit from lending money.
“People can get much higher returns on savings through these chamas than they possibly ever could in the formal sector,” says Heyer.
Lending out their savings comes from a strong culture of “making money work” rather than letting it sit idle, she adds.
Prospective members to the group must be personally introduced and vouched for by an existing member; Chama Wezadada will then discuss their entry.
All members of this chama must have their own businesses -many of the women sell food or run shops.
The household income of the group varies between 5,000 Kenyan shillings ($50) to 20,000 Kenyan shillings ($198) a month, according to Mamboleo.
Most women in the group are mothers, half are married to men who sometimes do casual work, while some of the unmarried members are widows.
“A lot of people lean on the chamas to support their really big goal in life, which is educating their children,” says Heyer. “The chama seems to be very uniquely placed to facilitate that, out of all other credit options that are available to them.”
Obahiambo, for example, began her trade earlier this year, which started as a hustle selling second-hand clothes.
Other than dubious street money lenders or family and friends, there are few other options for accessing credit informally.
Formal digital loans, such as M-Shwari, used through Kenya’s ubiquitous mobile money system M-PESA, do not provide as much as is sometimes needed, particularly for school fees, explains Heyer.
There is also suspicion of formal loans because of the prospect of defaulting and being blacklisted.
But the group says their chama is more understanding if members can provide a reason for not repaying a loan, and can also provide emergency funds of up to 30,000 Kenyan shillings ($295).
‘Help when I need it’
Chamas do have drawbacks, the most significant being the possibility of money disappearing.
According to FSD, 13 percent of chama members have lost money in the groups.
This could happen due to theft – as has previously occurred in Wazadada – or a member going bust while holding the cash. Heyer says women are sometimes pressured by their husbands to take loans, which are then squandered. Several members of Wazadada keep their membership secret from their spouses.
Heyer adds that poor management skills can sometimes be problematic, particularly as groups grow larger and more complex.
Despite the negative aspects, the Wezadada’s members maintain the group is a positive force in their lives.
Obahiambo can’t open a business bank account because she isn’t yet making enough money, but loans from Chama Wezadada, and another group, Chama Maendeo (Women Getting Ahead) mean she can keep her costs covered without red tape, until her business becomes more profitable.
Her biggest challenge, she says, is when business is down and less money is coming in. But having access to the chama means she can “get help when I need it”, and keeps everything ticking over.
“We don’t want to depend on our husbands, we want to help ourselves,” Obahiambo says.