In 2002, a 20 year-old young man packed his bags and set out for Nairobi in search of greener pastures, but with no specific employment plans in mind. He ended up finding work at Nairobi’s Kariokor area waiting tables at an eatery for less than three dollars a day. Did he imagine he would one day own property in Nairobi? No. Did he imagine he would one day buy and own the eatery he had been employed at? No.
The story of David Irungu is proof that Self Help Groups are the new money-making machines, churning out new young millionaires in town.
Above- David Irungu(second from left) with his friends, and members of Kamuiru Self Help Group.
‘I was a waiter here (at the eatery I now own) for over six years. At some point in 2010 I started a small side business of roasting meat just outside the hotel. Then in 2012 I met a friend, Nancy Wairimu, who asked me to join their chama so I can save up some money and later invest in starting my own business, ‘says Irungu.
Irungu however did not feel ready yet to join Nancy’s Self Help Group.
‘Nancy then told me about a programme at Equity Bank that supports chamas, where we can save a minimum amount of 200bob a week each, and after two months qualify to take a loan of up to 5-times the total amount saved.’
Armed with this information, Irungu set out to start a Self Help Group, with two of his friends, one of whom was Nancy’s husband.
‘Kamuiru Self Help Group initially consisted of three people, Kariuki Benson, Mugo Elijah and myself, Irungu. The name Kamuiru was coined from the first letters of our names.’
The three men registered the chama, and immediately began their weekly contributions. Soon enough, they qualified for about Ksh.50,000 loan.
‘At around this time my employer at the hotel had intentions to leave the business, and I knew I was well-equipped to run it if he left. I took the Ksh.50,000 loan under Kamuiru Self Help Group and started my eatery just next to the hotel where I sold matumbo.’
Progress was slow, but sure. Irungu and his friends had also managed to register more people to their chama, totaling to now 20 members.
Before joining the chama, each potential member would be thoroughly vetted, with a serious lifestyle and family audit done. Once existing members were satisfied with the results of a potential candidate, only then would they present him with the chama constitution to read and sign.
‘We were taking in only people with similar goals and vision as us. That is why the new member has to read our constitution and sign that they are in agreement with the goals, stipulated investment strategies and rules of the chama. If they are married, the wife also has to sign.’
‘We were taking in only people with similar goals and vision as us.’
This move, Irungu explains, is to ensure the family is aware and is involved.
‘This is a serious group, we don’t want a case where maybe one member misbehaves and when we follow up with the family they claim they never knew of such an investment group and that their son/husband has never been part of us.’
In fact, to be a member of Kamuiru Self Help Group, you have to be sharing their Christian principles.
With twenty registered members now on board, the men began strategizing on new investment opportunities.
‘All along we had been practicing table banking, where members borrow from the existing funds to cater for their needs, and pay back with 15 percent interest. This helped so much in getting our individual businesses up and running, as it is not easy getting a loan anywhere without individual security.’
One of the other members of the chama, Bernard Njoroge, explains that as a young person with no property to his name, it was impossible securing a loan from any financial institution.
‘Self Help Groups come in handy for those like me, the have-nots. Because once you are part of a chama, it becomes your guarantor, and you are able to get easier access to funds at a much lower interest rate. I managed to move from selling shoes for other traders at a commission at the end of the day to purchasing my own stock and setting up shop,’ Njoroge says.
‘Self Help Groups come in handy for those like me, the have-nots. Because once you are part of a chama, it becomes your guarantor, and you are able to get easier access to funds at a much lower interest rate.’
The table banking method of investment was akin to killing two birds with one stone; the group members get funding to expand their business, and at the same time the chama accounts grow fatter with interest paid on top of every loan repaid.
‘We were doing well, and now needed to expand our funds pool. It is at this point that we approached Youth Enterprise Development Fund (YEDF).’
At the YEDF, Kamuiru Self Help Group asked for a loan of KSH.100,000, with which again they intended to multiply by investing in table banking. Soon enough, with good investment strategy and commitment, the group managed to pay back their loan, and request for yet another at the YEDF, this time double the first.
‘We had shown great commitment and business skills with how we handled the first loan, so YEDF had no qualms giving us a second loan to continue growing ourselves, ‘says Irungu.
Even better was that both YEDF and Equity Bank provided officials who closely monitored and advised the group on matters finances.
‘Both institutions strive to develop and nurture a personal relationship with the Self Help Groups they work with. They visit us every week, offer advice and support where necessary and ensure there is progress.’
At around this time, Irungu’s employer at the restaurant was ready to leave the business, and was selling the establishment at KSH.300,000.
‘I did not have the money. But because Kaimuru Self Help Group had done so well and grown tremendously, I was able to secure a loan under the group and bought the establishment.’
This was the beginning of a series of successful ventures for Irungu.
‘I renovated the place, and realized I have more than enough space for a restaurant, so I also constructed other three small business spaces, one rented out as an Mpesa shop, one is a barber shop and one a retail shop.’
Just next to Irungu’s restaurant at Kariokor sits a chain of small businesses; butchery, an eatery, and another Mpesa shop.
‘These are owned by Benson Kariuki, also a member of our chama,’ Irungu points out, adding that all members now have thriving businesses as a result of the table banking in their group, and of course, commitment and good business strategies.
Irungu points out that for instance, some of group members were bodaboda riders, pocketing 400 bob a day after handing over most of the money to the motorbike owner. ‘They each now own their own bodabodas.’
With all these commendable efforts at progress, it is surprising that Kamuiru Self Help group has been around for barely four years.
‘We started in 2014. At that time each member was only able to contribute 100 shillings every week. We have since grown; each member now contributes KSH.850 every week.’
Irungu breaks the budget down for us.
Kes.200 goes to their Equity Bank kitty
Kes. 300 goes to Company saving* explained more later on in this article
Kes.300 goes to their Kamuiru Welfare Account
Kes. 50 is used to pay for the hall where they hold their weekly meetings.
Last month, the group purchased two parcels of land in Ruiru, going for 1Million, becoming their first land investment as a group, but not as individuals.
‘Many of our members don’t pay rent in Nairobi, they have managed to purchase land and build nice residential homes for their families, and rental houses.’
Kamuiru Self help group now boasts of about 2M in savings, money which they are looking to invest in a suitable business.
‘We are currently still doing our market research. We want to know what’s the best business we can invest in before we plunge in.’
This group of young men below the age of 35 years are not about to stop, with each owing their success to the benefits that come with starting a Self Help Group.
‘I would advise that if you are just starting out in business as an individual, start with what you can do well. Do it so well before moving onto the unknown. We want to get rich overnight, so we try to juggle this business venture and that, sometimes that we know nothing of,’Irungu says.
He adds that to ensure success in the self help group, only register people who want to go where you are going, this includes having the ability to pay the weekly contributions.
‘A chama is first the contributions, before the investment. If some members are not able to regularly and consistently contribute, then notable progress will not happen.’
‘A chama is first the contributions, before the investment.’
*In October 2016, Kaimuru Self Help Group registered as a company, and looks forward to starting operations.