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Ester Barinaga:

"Savings and Loans Groups (Chamas): A Communal Institution Governing the Flow of Money It is 6.30 a.m. in the morning in rural Rohoni, a small farming and fishing village some 50 km north of Mombasa. A group of some 25 women all wearing a T-shirt in the same shiny blue with the words “Pamoja Mikono SILC group”4 printed on the back sits on the ground under the shade of a big tree. At the center, a blue tin box. The group’s treasurer collects one-by-one every members’ weekly savings and gathers them in the box. Sitting closely by, another woman, the group’s secretary, holds an accounting book in her lap and dutifully annotates the sums each woman hands to the treasurer. Members also return previous loans, with interests when due. Once all communal money has been collected, there is a round of loan requests. It can happen that the tin box contains enough capital to attend all petitions. Often enough there is not, and members have to negotiate how to prioritize the granting of loans. One’s child may have had an accident and the mother is suddenly facing high hospital costs; another woman wants to re-stock her tiny grocery shop, the only one in the area selling much needed soap and wheat flour; a third woman has lost her job and, with it, the meager income she had and wants to hire a boda boda (a motorbike taxi) to buy some cooking fuel in the neighboring town for her to sell locally for a mark-up. Facing more financial needs than there are funds for, the group of women discusses the urgency of the many individual needs and the group’s priorities. Some women agree to relinquish their loan requests for someone else’s more pressing emergency. Under the conditions of scarcity they live in, assuaging one woman’s urgency, however, may very well mean accentuating another woman’s penuries the following week. Each loan decision is therefore potentially divisive and yet, the group of women has been meeting weekly for long and renewed their commitment every year.

Pamoja Mikono is one of hundreds of thousands of savings and loans groups in Kenya. You can see them in rural and urban areas; they are common among the most vulnerable groups and the more accommodated middle classes. The groups are defined by the territory—like the case in Rohoni described above and those connected to resident associations of urban informal settlements –, by family ties or occupational boundaries—like street vendor associations, waste-picker groups, or traders of a particular market. Or they can be set up purposely to coordinate a project—from funding the construction of an apartment building to bringing water pipes to the informal settlement. Scenes like the one in Rohoni take place in public parks and school yards, around the table of private living-rooms or in colorful plastic chairs by a public toilet.

Variously called SILC (Savings and Internal Loans) groups, SACCOs (SAvings and Credit COoperative), table-banks or, more generically, chamas5, the basic structure of savings and loans groups is constant: members meet at a fixed regularity at a fixed time of the day to pool their savings together and loan the savings total to group members. Individual savings are carefully noted in a ledger or accounting book, and so are the loans taken, the amounts reimbursed and the interests paid. Groups form for a year with a starting individual contribution equal from all, which sum makes for the initial capital fund. The fund grows with the regular individual savings and the interests on loans. At the end of the year, savings and interests are distributed back to the individual that contributed them. Apart from the social ties and obligations binding the members, groups have well-developed sanctions for misbehavior—such as fines for not attending a meeting, coming without the group’s identifying T-shirt, or chatting too much while at a meeting. These sanctions are noted in the ledger on a separate account and used to cover the costs of the end-of-the-year celebration. While there are many variations on this structure—the size of the group and the economic level of its members, the time period the group runs and the regularity at which it meets, the size of initial contributions and of individual regular savings, the maximum loan size, repayment schedules, and interest rates, the nature of sanctioning fines, whether savings and loans are in cash or mobile money6, and whether the final group’s savings are to be redistributed to individuals or used as investment for a collective business –, the basic principle of the chamas remains the same: pooling individual savings and giving group members access to the mutualized capital fund.

The chama economic logic is defined by the social practices of mutualization that constitute the very group. Pooling together individual savings and distributing them to work for the benefit of individual members, chamas play a central role in a process of commoning (Gibson-Graham et al., 2006) privately held national money. Instead of keeping one’s savings in one’s home or phone account where they are of no use to the community, chamas’ contribution practices pull money out of mattresses and phones and into the communal tin box (or phone card or bank account). Through the obligation of a regular individual contribution to the group, through rules on minimum size of that contribution, and through sanctions for failing to attend a meeting thus neglecting to contribute, chamas both commonalize money and keep it in the community. In Ostrom’s terms, the governance contribution rules that constitute the chamas are rules that mutualize money. These are rules that shape how many resource units there are for the group to use.

Then there are appropriation rules, those regulating the individual use of the monetary units thus mutualized. These rules concern loan granting, repayment schedules and interest on loans. Typically, appropriation rules are related to the size of an individual’s accumulated contribution to the common pool. For instance, the maximum loan size a member is granted from the group’s mutualized savings hinges on how much the particular member has contributed to the chama thus far—a common limit being twice the total savings the individual loan-taker has put into the group’s fund. That is, if a member has saved 3,000 KSh, she can receive a loan of up to 6,000 KSh. Or take repayment rules, which vary with the size of the loan. Staying with Rohoni’s Pamoja Mikono chama, for loans of up to 3,000 KSh, repayment had to be done within 1 month; for loans between 4,000 and 10,000 KSh, repayment was due within 2 months; for loans between 11,000 and 20,000, repayment time was 3 months. Prescribing the allocation size of the mutualized money and stipulating the speed of repayment, appropriation rules make sure that “money is not idle for long but changes hands rapidly, satisfying both consumption and production needs” (Bouman, 1983). In other words, the detailed appropriation regulations of the chamas shape how monetary units flow and circulate within the community, making sure that money reaches all members.

Contribution and appropriation rules set the tone of the chamas economic logic, one that builds a capital commons through practices of pooling and that guides the flow of resources to the benefit of community members through practices of loan allocation. The economic logic of the chamas is one of mutualization and circulation, of commoning and distribution within the boundaries of the chama. Of pulling money into the group and pushing it out to its members. This logic is well illustrated by the unconventional understanding of interest visible when groups distribute earnings at the end of the year. Instead of the dominant approach to interest as payment for the risk incurred by the lender (normal in bank loans), these groups see interest payments as contributions the borrower makes to the group’s pooled savings. At the end of the year, individuals are given back a lump sum made of her annual regular contributions and a percentage of the interests she paid to the group for the loans she took. At Pamoja Mikono chama, 50% of an individual’s interest payments were paid back to her. The other 50% was distributed evenly among those group members that had taken loans throughout the year. Because members failing to borrow from the common pool are perceived as not contributing to the pool in the form of interests paid, these members receive no dividends at the end of the accounting year even though their savings were also pooled into the fund for the granting of loans. It is a distinctive ethics of interest, one that centers not around the individual risk of the lender, but around the borrower’s contribution to the commons. Members’ relationships to the chama, that is, are framed as provision to a commons, their financial commons, from which all members benefit in the form of access to financial services that are un-reachable for them through the regular banking system. To Martin’s first question—What are the rules governing money?—chamas answer with mutualization and circulation rules.

Chamas “answer to the second question—Who gets to decide?—and implicitly, I would add, to the question ‘on what basis are decisions taken?” is also distinctive. Each loan decision involves a delicate balance between individual economic needs, community relations and situational knowledge. When granting loans, prioritizing someone’s hospital costs may mean somebody else’s needs won’t be covered this time, or a community need for, say, fuel will have to wait for a while. Tightly intertwined with financial considerations are matters of communal life, of neighborly relations, of social and financial security. Each decision involves a mix of personal and impersonal concerns that need to be weighed against past group decisions and anticipated community needs. It is the group who decides the rules, indeed. These rules are however not based on profit-maximization. Rather, decisions are based on a mix of financial and social concerns, of impersonal and personal relations, of obligation and trust, and are continuously re-considered in relation to the changing circumstances of community life.

The chama logic of mutualization and circulation, that is, is not an approach that merely centers on finance, one exclusively focused on impersonal relations of economic obligations and rights. Governing personal and group relations is just as crucial. Pamoja Mikono chama’s management of group relations when these founder illustrates the point. The temptation for the treasurer to take the tin-box with the collected savings and fines and flee is always present. And while such sort of misdeeds are rare (see Geertz, 1962; Burman and Lembete, 1995), they do occur from time to time. One interviewee recounted the occasion when the tin-box disappeared with 500,000 KSh of group savings in it—a large sum for poor female farmers in rural Kenya. The treasurer argued the box had disappeared while she was away from her home. Resolved to find the culprit, the group altogether went to a nearby sacred forest and prayed for the wrongdoer to get sick and die. “Nobody has died yet,” the interviewee explained. The chama also denounced the treasurer to the police and expelled her from the group. Personal and financial relations broke down. In such situations, when relations within the group collapse, conjuring the spirits offers a procedure to rebuild personal connections. No death overcoming, this practice opens up the possibility for the suspect to regain the trust of the other group members and eventually return to the chama. For as much as the individual finds financial and social security in the group, the group builds its financial and political strength in the sum of its members. Such is the economic logic of mutualization, one that is conditioned to the tight weaving together of impersonal financial relations with personal knowledge and intimate trust.

It can be argued that mutualization rules, social practices and cultural beliefs not only govern financial obligations and enable the coexistence of impersonal and intimate relations within the group; they also contribute to build trust in chamas as financial institutional arrangements for the community (Malkamaki, 2015). In this doing, chamas become structures the community has instituted for transforming private assets (one’s savings) into community assets (the group’s fund); that is, into a financial commons for the group. The strength of this mutualization logic for building savings and anchoring a community’s economic life has long been recognized by scholars (see Geertz, 1962) and development agencies (Boonyabancha, 2001) who build their micro-lending programs, such as those promoted by Yunus and his Grameen Bank, on these community institutions (Biggart, 2001; Yunus, 2003). Important as their financial function for the community is, it is the particular, integrative, communal economic logic they spring from—a logic of mutualization and circulation, of developing a commons for the benefit of all members, and of weaving together financial and social obligations—that, in Kenya, captured the attention of the community crypto-entrepreneur. As he set to develop a monetary system for the many, one that “give[s] people the same power as banks7,” chamas became the institution on which to decentralize matters of governance and decision-making concerning the creation and circulation of the new money. The next section looks into the extent to which the monetary system in-the-making borrows from the chama logic to answer the twin questions of this article—“what rules” and “who decides.”" (