Chama glossary

The words groups use for their money, meetings and records, explained in plain language. Useful for new members, new officials and anyone writing a constitution.

Account number (bill reference)

The account number is what a member types when paying to a Paybill. Groups give each member their own number, such as a member number, so each payment can be recorded against the right person automatically.

AGM

The annual general meeting is the yearly meeting of all members where officials present the accounts, members approve the share-out and audit, and elections are held when terms end.

Arrears

Arrears are payments that are overdue: contributions not paid by the due date, or loan instalments not paid on time. Many groups charge a fine or penalty on arrears.

Authenticator app

An authenticator app, such as Google Authenticator or Microsoft Authenticator, shows a new six-digit code every 30 seconds. Officials enter the code to sign in and to approve money, so a stolen password alone is not enough. More about authenticator app

Balance sheet

The balance sheet shows what the group owns (cash, loans to members, investments) and what it owes, including members' savings and shares, at a date.

Buy Goods till

A Buy Goods till is an M-PESA business number for receiving payments without an account number. Payments are matched to members by their phone number.

Chama

A chama is a group of people who pool money regularly to save, lend to each other, invest or support members in hard times. The word is Kiswahili for "group" or "association". Chamas range from a handful of friends to registered groups with hundreds of members. More about chama

Constitution

A group's constitution is its written rules: its objectives, who can join, contributions, loans, officials, meetings and how money is approved and accounted for. More about constitution

Contribution

A contribution is money a member pays into the group under its rules, such as monthly savings, shares, a welfare levy or a merry-go-round payment. Each type is usually tracked separately.

Double-entry bookkeeping

Double-entry bookkeeping records every transaction in two accounts, as a debit in one and an equal credit in another, so the books always balance and errors show up. More about double-entry bookkeeping

Fine

A fine is a charge for breaking a group rule, such as paying a contribution late, arriving late or missing a meeting without an apology.

Flat-rate interest

Flat-rate interest is charged on the original loan amount for the whole repayment period, however much has already been repaid. For example, 10% a month flat on a KES 10,000 loan is KES 1,000 of interest every month until it is repaid, even in the last month.

Guarantor

A guarantor is a member who promises to cover part or all of another member's loan if the borrower doesn't repay. Groups usually lock the guaranteed amount of the guarantor's savings until the loan is repaid. More about guarantor

Income statement

The income statement shows what the group earned (interest, fines, investment income) and spent over a period, and the surplus or deficit that results.

Investment group

An investment group, or investment club, pools members' contributions to buy assets such as land, shares, treasury bills or a business, and shares the returns in proportion to what each member has put in. More about investment group

KYC

KYC ("know your customer") means confirming who members are, usually with their ID number and a copy of their ID. Groups that hold members' ID details must protect them under the Data Protection Act, 2019. More about KYC

Loan restructuring

Restructuring changes the terms of a loan a member is struggling to repay, usually by extending the repayment period so instalments are smaller.

Loan top-up

A loan top-up lets a member borrow more while a loan is still running: a new, larger loan is issued and part of it clears the balance of the old one.

Merry-go-round

A merry-go-round (also called a rotating savings group) is an arrangement in which every member contributes the same amount each period and the whole collection goes to one member in turn, until everyone has received it once. More about merry-go-round

Minutes

Minutes are the written record of a meeting: who attended, what was discussed and what was decided, by whom. They are confirmed at the next meeting.

Paybill

A Paybill is an M-PESA business number. People paying enter the Paybill number and an account number, which lets the group tell who paid and what for. More about paybill

Penalty

A penalty is an extra charge on a loan instalment paid late, usually a percentage of the instalment, set out in the group's rules.

Portfolio at risk (PAR)

Portfolio at risk is the share of the money out on loan that belongs to loans with an instalment overdue. It is the usual way to measure how healthy a group's lending is.

Quorum

The quorum is the smallest number of members who must be present for a meeting to make valid decisions, as set in the constitution, for example half of all members.

Reconciliation

Reconciliation is checking that the group's records agree with its M-PESA and bank statements: every payment received is recorded, and nothing recorded is missing from the statements.

Reducing-balance interest

Reducing-balance interest is charged only on the part of the loan still owed, so the interest in each instalment falls as the loan is repaid. It costs the borrower less than the same rate charged flat.

SACCO

A SACCO (savings and credit co-operative) is a member-owned co-operative that takes members' deposits and shares and lends to members. Large deposit-taking SACCOs in Kenya are licensed and supervised by SASRA. More about SACCO

Savings (deposits)

Savings, or deposits, are money a member keeps with the group. Groups often let members borrow a multiple of their savings and return savings, less anything owed, when a member leaves.

Self-help group

A self-help group is a community group, often of women or young people, formed to save, borrow and carry out projects together. In Kenya many register with the Department of Social Development.

Share-out (dividend)

A share-out, or dividend, is the distribution of the group's profit (mostly loan interest, fines and investment income) to members, usually once a year and in proportion to each member's savings or shares.

Shares

Shares are units of ownership in the group bought by members. Unlike savings, shares usually can't be withdrawn while the member stays in the group, and they are often the basis for sharing profits.

Signatory

A signatory is an official whose approval is needed before the group's money is paid out. Requiring two or more signatories means no single person can move the group's money alone. More about signatory

STK push (M-PESA prompt)

An STK push is the M-PESA prompt that appears on a member's phone asking them to enter their PIN to approve a payment the group's system has requested. The member never shares their PIN with anyone.

Table banking

Table banking is a way of running a group in which the savings collected at each meeting are lent straight back to members, usually with interest. The interest earned is shared among members, often at the end of the year. More about table banking

Trial balance

A trial balance lists every account with its debit or credit balance at a date. If the totals don't agree, something has been recorded wrongly.

Welfare group

A welfare group collects regular contributions to support members when something happens to them or their family, such as a death, a hospital stay, a wedding or a new baby. Claims are usually approved by a committee. More about welfare group