Kenyans can now invest as little as Kshs 5 on their mobile phones thanks to a new platform Chumz, developed by Moneto Ventures in partnership with Nabo Capital, a fund manager in Kenya regulated by the Capital Markets Authority (CMA) and Retirement Benefits Authority (RBA).
Chumz is an app that enables anyone with a mobile money account to create financial goals as an individual or as a group and invest their money towards the goals, track progress and earn interest. To provide the best available advice and investment options for investors, Chumz has partnered with Nabo Capital.
(TOP: Sam Njuguna – left – the CEO and co-founder of Moneto Ventures and Pius Muchiri, the CEO and MD of Nabo Capital at the launch of Chumz).
Samuel Njuguna, the CEO of Moneto says the app will be available for download from Google Play and Apple App Stores. He said once a user is registered, they will be able to create saving goals as an individual or with a group. The app will then send prompts to the user to invest towards their goal and offer advice on investing based on spending habits. Noting that the app is authorized under the CMA’s fintech Sandbox.
Njuguna said research carried out by the firm indicates that Kenyans have a “self-imposed” limitation that they can only save Kshs 1,000 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. We set out to find why customers were not taking up investment options in our developing market and learnt three things; 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. 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,” said Njuguna.
He said the research 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.”
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 Kshs 5 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.
Njuguna said that for people who had been struggling with bringing themselves to save and invest, the Chumz app will automatically 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. You 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, “he noted.
Speaking at the launch, Nabo Capital MD 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 further noted 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.”
Muchiri further noted that, chamas (informal groups where people pool money together and invest) are a way of life in Africa including Kenya. There are estimated to be 300,000 chamas managing a total of Kshs 300 billion in assets; a number that could rapidly increase with proper governance structures and investment platforms.
“Some of the challenges that chamas face are lack of transparency and investment expertise. This App will enable all members to contribute at their own convenience towards their goals and view in real-time how Nabo is growing their money through various investment solutions that are tailored for their needs”, he further noted.