A Chama, like any saving circle, is a smallgroup of people who trust each other, make a commitment to save money together, and meet
weekly or monthly in pursuit of their goals. There are two types of savings and credit associations: Rotating Saving and Credit
Associations (ROSCA) and Investment-based savings and credit associations (Accumulating Savings and Credit Associations - ASCAs). 2
They contain between three and 30 members who pool their savings together and invest as a group. 3 These are the simplest and most popular form of saving circles around the world. In the US alone, rotating saving clubs formed by immigrant communities are a $30 billion market. Rotating groups (ROSCA) provide members with regular cash sums. A group of friends agree to save a certain amount, either weekly or monthly. Each cycle, a different member takes home the funds paid in. For example, ten members save $100 per week. Each week, one member will take $1,000 home. There’s a risk that someone receiving a payout early in a rotation may default on payments before the rotation ends. The solution is to structure payouts: the most trusted members receive theirs first, and the least trusted (ie, newest) members receive them last. Additionally, Chamas require new members to be guaranteed by existing members. Because of their simplicity, rotating Chamas are the most popular. In Kenya, there are three times more rotating clubs than investment clubs.