Here is how that Sh5 can make you achieve your financial dreams

Making savings does not come easy for many people and most African countries struggle to entrench a savings culture among citizens.

This has been attributed to a number of factors, with one of the major one being tight budgets that do not give room for individuals and households to save or invest.

Also lack of awareness on available opportunities or channels for making savings is one of the setbacks hindering many people from making investments towards their future. Besides, the widespread perception is that you need a lot of money to make savings.

Thanks to these various challenges, countries such as Kenya are experiencing low savings and various efforts have been made to increase the number of people putting aside something for a rainy day.

The future of savings is however increasingly looking bright as many innovative products come into the market. One such innovations is an app, known as Chumz, that enables anyone with a mobile money account to set financial goals as an individual or as a group and invest their money towards the goals, track progress and earn interest. In Kenya’s street language, ‘chumz’ means cash.

The beauty of this product is that you don’t need tonnes of money to benefit from it. If you have as little as Sh5 to spare you are good to go. The app is the brainchild of Moneto Ventures in partnership with Nabo Capital.

Moneto chief executive Samuel Njuguna says the platform will be available for download from Google Play and Apple App Stores.

Once a user is registered, they can proceed to generate saving goals. The app will then send prompts to the user to invest towards their goal and offer advice on investing based on spending habits.

Mr Njuguna said research carried out by the firm indicates that Kenyans have a “self- imposed” limitation that they can only save Sh1,000 and above.

“Our journey in Chumz began when we observed that Kenya has numerous lending apps which are fueling a consumerism culture and limited investment solutions,” he said. The app is under the Capital Markets Authority fintech sandbox.

Mr Njuguna said he conducted a research to find out why people were not keen on investment options in Kenya. From the research, he learnt valuable lessons. ‘

“Most people are unbanked or under-banked. This means they have to spend more time and effort to invest their money. There is also heavy investment jargon by the financial sector that makes potential clients shy away from investing,” he noted

“Lastly, the current solutions lack methods to keep the people engaged in saving such as feedback mechanisms, social nudges and reminders on when to save and invest.”

The research, he said, also highlighted that Kenyans lack awareness on investment channels they could easily access and track their investment with minimal friction in terms of time and financial cost in making the investment.

“With most people transacting on mobile money it would be easier to have a comprehensive saving and investment solution on their phone, the reason we got inspired to develop Chumz.”

Mr Njuguna noted that while a lot of Kenyans expressed the desire to invest, most were experiencing psychological barriers to investing including lack of commitment to a saving plan, being overwhelmed by expenses and forgoing saving for instant gratification.

“The platform will allow users to invest as low as Sh5 to enable individuals to build a savings culture. This concept is in line with the tradition of using piggy banks to save and nurturing the habit of saving,” he further noted.

For people who had been struggling with bringing themselves to save and invest, the Chumz app hopes it will use its AI algorithms and data analytics to guide them on how much to invest based on their spending habits

For instance, if you spend in a restaurant the app will suggest how much you need to save. Users can also invest with family and friends as well as making use of behavioral psychology practices such as social nudges, default bias, and self-commitment to bridge the gap between intention and action.

Nabo Capital Managing Director Pius Muchiri noted that there are about 200,000 active investment accounts in the capital markets compared to over 34 million active bank accounts. 

He highlighted that bridging this gap is the most important key to accelerating our economic growth.

“Through Chumz, we will enable Kenyans to achieve any aspiration including education, travel, home-ownership and so on. Our partnership is grounded on one desire: to democratize investment by giving people access to opportunities with competitive returns.”

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