Features & Sacco Leadership

Why Merry Go Round will not earn you wealth

Disadvantages of Chama: SACCO continuity: Key factors influencing SACCO dividends: How to Buy SACCO shares

Merry Go Round, popularly practiced by women in the western region is like a ritual, otherwise, you are not ‘mama maendeleo.’

“It starts by creating a group of at least five people, the number increases with time,” Easter Simiyu, a leader of a Merry Go Round in Bungoma County says.

“The commitment of the members also plays a big role in the growth of Chama.”

Simiyu started Merry Go Round after finishing high school. The journey was inspired by her mother who has been on various Merry Go Rounds over decades.

“Since I was a young girl, my mother has been participating in various Merry Go Rounds. There was one they were paying daily Ksh50, weekly Ksh500, and monthly Ksh100.”

Her mother told her that the practice is ideal for investing because when you literally keep money, you are tempted to spend. 

“It is tempting to keep money in the house. Besides, we cannot talk about SACCO or banks since they are far from where we are.”

Before online banking, it required one to physically deposit money in a financial institution. Therefore, the simplest way was Merry Go Round.

“My mother has been a pivotal asset to our family. She used to boot our father in many critical moments by hijacking one of the Merry Go Round members. She has paid our school fees as well as furnished the house.

“It is something that we have always encouraged her to engage in because of the smallholding developments and fee payment.”

Simiyu, following the same track, faces various challenges.

“I expected to make wealth from Merry Go Round but things are not working for me. It is just a mere circulation of money that gives no interest.”

Disadvantages of Chama

Kenneth Muchina, Chief Executive Officer at Funguo Investment Limited says that never save for the sake of saving.

He notes that savings that bring no additional return are not productive.

“Merry Go Round, where members periodically contribute an amount that doesn’t earn a return, but which is then passed to one of them – comes to mind. Although they are deeply entrenched in our society, they should be improved to become tools of wealth creation.

“Your methods should have certain characteristics that make them effective. For instance, they should never expose you to risks you can’t afford. Should earn returns that ideally are higher than the rate of inflation, and should be transparent.”

According to Simiyu, a special type of Merry Go Round dubbed “Bhiesela” in the county allows members to earn interest through savings.

“I am opting for “Bhiesela” because members are allowed to save and earn interest.”

The type of Merry Go Round has a programme where members save and loan.

Members save the money at the same time they are allowed to borrow and return with the interest. At a specific time of the year, members withdraw their money with the earned interest.  

Muchina has learned that the biggest mistake you can make with money is failing to understand how money functions.

“For instance, failing to plan and exercise personal discipline with money is akin to abusing it; it will inevitably lead to poor usage of money. In the same vein, many who are trying to build wealth will tend to have unrealistic expectations of their investment’s return. Before you invest, have a clear understanding of exactly how much return you invest will bring compared to other options on the table,” Michuna says.

Sadly, debt is a misunderstood financing option.

“Many people tend to fear debts, but they are very important in the growth of wealth. The trick to getting the full benefits of debt lies in utilizing it judiciously. For example, do not borrow to fund consumption. When you take up debt, it should be to fund activities that will produce more income. Similarly, never make the same mistake of borrowing more than you can sustain; this kind of debt will choke you up!”

Andrew Walyaula
Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

Andrew Walyaula

About Author

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

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