Chama Constitution Kenya: The Complete Guide (2026)

In 2009, my mother guaranteed KSh 460,000 for another member of her welfare group.

The woman repaid KSh 100,000 and disappeared.

It took my mother six years to find her again. When she did, she discovered that several other members had known her whereabouts all along. Nobody had said a word. The welfare eventually recovered its money from my mother’s savings account. When she asked for help tracking the borrower, she was told the group’s rules protected the group, not individual guarantors.

Years later, I joined a 12-member virtual property chama. We contributed bi-monthly. When your turn came, the group bought you goods worth KSh 45,000. I was fifth in line. I paid in for months.

The month my payout came due, the group collapsed. The organizer stopped picking calls, then blocked everyone who had not yet received. Out of twelve members, I had met only three. The rest existed only as names on WhatsApp. I never got my KSh 45,000, and neither did anyone behind me in the rotation.

Neither of these situations involved bad people. What was missing, in both cases, was written rules.

Why Most Chama Guides Miss the Point

Most articles on this subject will tell you what a constitution is, list the sections, and end with “consult a lawyer.” That advice does not help when your treasurer has gone silent and you are staring at a WhatsApp group of strangers.

What follows is written for the situation as it actually happens. Defaulters. People who disappear. Money that has already changed hands and is not coming back on its own. Every rule below is paired with what happens when it is broken, and what Kenyan law actually says about it.

What a Chama Constitution Really Is

The constitution is the operating agreement of your group. It covers who can join, how much they pay, who leads, how disputes are resolved, and what happens when someone wants out.

Kenya has no standalone chama law. But if your group registers as a Self-Help Group with the Ministry of Labour and Social Protection, your constitution becomes binding under the Societies Act. If you register as a Co-operative, it binds under the Co-operative Societies Act.

Even if you never register, a signed constitution is enforceable as a contract. That means if someone breaks the rules, you can sue them at the Small Claims Court.

The Sections Your Constitution Cannot Skip

Name and Objectives

Write the group’s exact name as it should appear on any bank account. State the physical location of the group’s registered office. Write the objectives clearly.

If you operate under more than one name, or if the group has no fixed location, you will run into problems opening a bank account, and you will run into problems filing a claim in court. A Self-Help Group registration certificate only protects the name that appears on it.

Membership

Every member must be at least 18, proposed by an existing member, and approved by two-thirds of active members. Before anyone pays their first shilling, collect a copy of their National ID, their physical address, and a working phone number.

The Ministry of Labour requires a full members register with names, ID numbers, and signatures. Collecting ID copies is not intrusive. It is what allows you to trace someone who defaults.

Contributions and Fines

Write the exact amount, the exact date it is due, and the exact penalty for being late. A late fine should be between KSh 100 and KSh 500. If someone misses three payments in a row, they should be suspended from group activities. Miss six, and the group can vote to expel them.

If a member stops paying, you can recover through Small Claims Court for any amount up to KSh 1,000,000. Filing fees are between KSh 500 and KSh 1,000. Cases resolve within 60 days. You do not need a lawyer. The court was set up for exactly this kind of case.

Leadership Succession

State the three core roles: Chairperson, Treasurer, and Secretary. Two-year terms, renewable once. Then write this clause that most groups forget:

“If any leader is unable to perform their duties due to death, illness, resignation, or disappearance, the group shall hold a special election within 14 days. The outgoing leader or their legal representative must hand over all records and funds within 7 days.”

Without this clause, everything stops the moment a treasurer disappears with the M-Pesa line.

If the group is registered as a Society, leadership changes must be filed with the Registrar within 14 days. Failing to do so can lead to deregistration.

Guarantor Rules

This is where my mother’s story matters.

Require every guarantee to be in writing, signed by both the borrower and the guarantor. Cap the maximum any single member can guarantee. Require that the guarantor be notified in writing within 7 days of any default. Give the guarantor the right to recover from the borrower through court.

Under Section 3 of the Limitation of Actions Act, a guarantor has six years from the date they settle a debt to sue the borrower for recovery. That is the full legal window. My mother did not know this, and by the time she found the woman, the window had already closed.

If you ever guarantee someone, do it in writing. Keep a copy of their ID, their physical address, and two witnesses. Save every message.

Exit, Withdrawal, and Death

State the notice period for leaving the group. Most groups use 30 days.

State the refund formula. The cleanest version is: total contributions paid, minus any outstanding fines, loans, or penalties.

Require every member to nominate a next-of-kin in the register.

If a member dies without a nominated next-of-kin, the payout gets tied up in succession disputes under the Law of Succession Act. This can take years and consume much of the money in legal fees.

Dissolution

Dissolution requires a two-thirds majority vote at a special meeting called for that purpose. All outstanding debts are paid first. Remaining assets are distributed in proportion to each member’s total contributions.

If the group is a registered Society, dissolution must be filed with the Registrar within 14 days. Creditors have priority over members.

How to Trace a Member Who Disappears

When someone vanishes with group money, or refuses to pay arrears, there is a defined process.

Start by gathering everything you have. The signed constitution, M-Pesa receipts, WhatsApp conversations, bank slips, and the member register. The paper trail matters, and it starts the day someone joins. By the time they disappear, it is too late to start collecting it.

Send a formal demand letter stating the exact amount owed and giving a 14-day deadline. If you have a physical address, send it by registered post. If you do not, send it via WhatsApp and email, then screenshot everything as proof of delivery.

File your claim at the Small Claims Court nearest to you. You will need a Statement of Claim, the evidence you gathered, the demand letter, and a filing fee of KSh 500 to KSh 1,000. You need the defendant’s full name and their address.

If you have only their ID number and phone number, apply for a court order compelling disclosure of their registered address. It takes time, but it can be done.

Once you have a judgment, apply for a warrant of attachment against the defendant’s salary or property through a court-appointed auctioneer.

The Virtual Chama Problem

My property chama was almost entirely virtual. I knew three members by face. The rest were phone numbers and display names.

This is the hardest kind of group to recover from when things go wrong. You cannot serve court papers to a WhatsApp number. You cannot send a demand letter to a display name. A constitution that nobody actually signed is not enforceable in any meaningful way.

If you are joining a virtual chama, insist on three things before you send money.

Every member must show up on a live video call before you join. Not photos, not voice notes.

Every member must sign the same constitution, with a National ID copy and physical address on file.

The group must be formally registered with the Ministry of Labour, so it has a legal identity you can sue.

If the group refuses any of these, walk away.

What Would Have Saved My KSh 45,000

Looking back at that property chama, three things stand out.

Every member should have been vetted face to face before joining. No purely virtual members.

The group should have had a written constitution, signed by all twelve members, with a copy held by each.

If the organizer went silent for more than a week, an emergency meeting should have been triggered automatically to appoint a replacement.

None of these were in place. That is why the money is gone.

Sample Constitution

Below is a starting point. Adapt it. Fill in your group’s numbers. Then have every member sign.

CONSTITUTION OF [GROUP NAME]

We, the undersigned members of [Group Name], adopt this Constitution to govern our savings, welfare, and investment activities, effective [Date].

ARTICLE 1: NAME

The group shall be known as [Group Name], with its registered office at [Location].

ARTICLE 2: OBJECTIVES

To promote savings among members. To provide welfare support during emergencies. To invest jointly for the benefit of all members.

ARTICLE 3: MEMBERSHIP

Membership is open to individuals aged 18 and above, proposed by an existing member and approved by two-thirds of active members. Every member shall submit a copy of their National ID, physical address, and active phone number.

ARTICLE 4: CONTRIBUTIONS AND FINES

Every member shall contribute KSh [Amount] on or before [Day]. A late payment attracts a fine of KSh [Amount]. Three consecutive missed payments trigger suspension. Six trigger an expulsion vote.

ARTICLE 5: LEADERSHIP

The group shall elect a Chairperson, Secretary, and Treasurer, each serving a two-year renewable term. Any vacancy shall be filled within 14 days.

ARTICLE 6: GUARANTORS

No member shall guarantee another member’s obligation without a written, signed guarantee agreement. The maximum guarantee is KSh [Amount]. Guarantors are notified within 7 days of default and retain full recovery rights against the borrower.

ARTICLE 7: EXIT

A member may exit with 30 days written notice. Refunds equal total contributions paid, minus outstanding fines and penalties. Next-of-kin must be nominated in the members register.

ARTICLE 8: DISSOLUTION

The group may be dissolved by a two-thirds majority vote at a special meeting. After settling all debts, remaining assets are distributed in proportion to contributions.

ADOPTED ON [Date].

Chairperson: ______________________

Treasurer: ______________________

Secretary: ______________________

Members: ______________________ (repeat for all members)

Generate Your Constitution in Under a Minute

If writing all of this out feels heavy, we built a free tool that does it for you. You fill in your group details, and it generates a complete, print-ready constitution you can download and share with your members.

Open the Chama Constitution Builder

The rules you write today are the ones that will protect you tomorrow. My mother spent six years chasing a woman who was hiding in plain sight. I watched a WhatsApp group go silent overnight. The lessons came at a cost. Yours does not have to.

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The Merry-Go Editorial Team writes about chama management, savings groups, and financial tools for Kenyan communities.