TLDR

Chamas represent a vital force in Kenya's financial landscape, managing substantial assets exceeding $6.5 billion and facilitating domestic savings of over $4 billion. These informal savings and investment groups serve as essential platforms where members collaboratively save, invest, and provide mutual financial support. While Chamas demonstrate remarkable economic impact, they face ongoing challenges in areas of transparency, legitimacy, scalability, and operational effectiveness. Our analysis examines the current governance framework of Kenyan Chamas, with particular emphasis on how technological solutions can address these challenges and optimise group performance.

Introduction

Chamas, which means "groups" in Swahili, are structured financial organizations that operate throughout Kenya, with many registered formally as Savings and Credit Cooperative Organisations (SACCOs). These institutions facilitate collective financial management through systematic member contributions and strategic investment in revenue-generating ventures and savings programs. Chamas have demonstrated significant impact in advancing economic empowerment, enhancing financial accessibility, and fostering community growth. They are particularly notable for their inclusive approach to financial services, with a strong presence among women in underserved communities. These collaborative financial institutions demonstrate effective community-driven approaches and sustainable practices that contribute to long-term economic development. These organizations demonstrate commoning principles through their flexible and supportive lending practices. The structure of Chamas aligns with Elinor Ostrom's principles for managing commons.

1. Commons need to have clearly defined boundaries. It is particularly important that these boundaries define who is entitled to access what. Commons need a specified community of benefit, otherwise a resource risks becoming a free for all.

As a Chama member, I clearly understand my roles and what I need to care for and with whom I share this responsibility. Commons resources, whether environmental or intellectual are those that we create together, that we maintain as gifts of nature or whose use has been guaranteed to everyone.

2. Rules should be adapted to the local context. There is no one-size-fits-all approach to governing a commons. Rules should be proposed and decided on by local people and have a deep rootedness in local ecological needs.

As a member of several Chamas, I can attest to the differences in each constitution, with each group serving specific use cases. The same applies with each investment decision made by the group. Adaptive decision making is at the forefront. As a commoner, I am satisfied that there is a fair relationship between my contributions and the benefits I receive.

3. Participatory decision-making is crucial. Rules are more likely to be followed by people if they had a hand in writing them, hence it is important to involve as many people as possible during decision-making processes.

Every single member will take part in all decisions made in the Chama, whether they chose to give or not give support or abstain from the vote.

4. Commons need to be monitored. Once rules have been put into place, communities must come up with ways of checking that people are following them. Accountability here is key.

We validate and verify these commitments ourselves and sometimes we mandate others whom we trust to help us reach this goal. Through meetings or polls we continually reassess whether our commitments still serve their purpose.

5. Sanctions should be graduated for those who abuse the commons. Ostrom observed that banning people who broke the rules within a commons usually led to resentment.In order for a commons to work, she proposed that a community needed to come up with a system of graduated sanctions such as warnings, fines, and informal reputational consequences.

Each Chama works out appropriate rules for dealing with violations of our commitments. We determine whether and what kinds of sanctions shall be used, depending on the context and severity of a violation.

6. Conflict resolution should be easily accessible. When issues arise within a community, solutions for mediation and conflict resolution should be informal and affordable for everyone.

Every Chama member has access to a means for conflict resolution. We seek to resolve conflicts among us in an easily accessible and straightforward way. Additionally initiating conflict also has its process and method.

7. Commons need legal status, hence the right to organise. Local authorities can cause legal barriers for commons which they do not regard as legitimate.

As autonomous organizations, we maintain independent governance of our operations, with recognition from external authorities. While Kenya does not currently mandate registration of Chamas - in contrast to Tanzania's regulatory framework - there is increasing emphasis on establishing oversight through local administrative channels, particularly the area Chief who serves as a primary mediator.