The Sunday Nation
Nairobi,
14 February 2010
Mary Wanjiku says that she joined a
Chama a few years ago but it
has not been doing well. “We started off as a group of seven, raised
money and started making some investments. Unfortunately, our
investments have performed poorly and now some members have run out of
patience – they want to get out.
“How can we determine how much money to pay them? The big problem is
that some have not been keeping up with their monthly instalments and
they have arrears; yet they want to get out. Furthermore, we have spent
some of the money no administrative expenses”
Take heart Wanjiku, the problem is not as difficult as it sounds. In
order to explain a “fair” method of going about it, let me use the
example of a smaller Chama of
three people; call them Tom, Dick and Harry.
Suppose they agree to contribute Sh500 per month into their
Chama. After one year, they have Sh18,000 per year. Now suppose
further that they spent Sh5,000 in the first year on registration fees
and other administrative purposes. That leaves Sh13,000.
At this point, they invest Sh10,000 in some shares but the price drops
by 40 per cent soon after their purchase. The value of their investment
goes down to Sh6,000. On seeing this, Harry develops cold feet and
starts skipping contributions.
By the end of the second year, Harry has skipped four instalments and is
therefore Sh2,000 in arrears. Now he wants to get out since the value of
their investment has never grown above Sh6,000. The question is, how
much money should he get? Is he justified to ask for his full
contribution (Sh10,000)?
The straight answer is no! He must take a share of the losses and
expenses incurred by the Chama.
Indeed, many clubs have additional penalties for resigning members, but
to keep things simple we shall assume that Tom, Dick and Harry do not
have such a rule.
The first step in determining how much he can “fairly” ask for is to
work out the net worth of the
Chama. This is simply the amount of money in the bank plus the
present market value of the investment. Luckily, this is not a trading
establishment, thus it does not owe money, neither is it owed any.
Therefore, we proceed as follows:
Tom and Dick have contributed Sh12,000 each, while Harry has paid
Sh10,000. This makes a total of Sh34,000 in contributions. From this
they have spent Sh15,000 (Sh10,000 in investment and Sh5,000 on
administration). Therefore, they have Sh19,000 in the bank (assuming it
pays no interest and there are no commissions on the account).
The current value of their investment is only Sh6,000, therefore, the
Chama is worth Sh19,000 plus
Sh6,000, equals Sh25,000. Now this is 73.53 per cent of the amount
contributed by the members.
Thus, if a member wanted to resign from the
Chama, the “fair” amount he
can ask for is 73.53 per cent of his contribution. That way, he will
carry his share of the losses and expenses incurred as at the point of
resignation. In the case of Harry, this comes to Sh7,353 (73.53 per cent
of Sh10,000).
It is clear that Tom and Dick do not have to
sell any of the Chama’s investments – they have Sh19,000 in the bank and they can
pay Harry from this. Once paid off, Harry cannot claim any future
profits from the Chama. He is
out and out kabisa!
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