NAIROBI, Kenya, April 29 – A few years ago, Samuel Njuguna and his colleagues started a business to guide people on how to save and invest money.
Because of what they were offering, the entrepreneurs were optimistic that their business would soon grow into the next big thing.
However, after several months of starting their businesses, the entrepreneurs had not achieved most of their goals. They began to doubt themselves.
“Before you start a business, you make a lot of assumptions about how it will turn out. We realized that people are not going to invest in us,” says Njuguna.
For example, like most investment firms in Kenya, we found that the initial deposit requirements we set were too high in a country where the majority of the working population earns less than Sh50,000 per month.
To fill this gap, Samuel decided to use his background in computer science to develop an application that would allow anyone to save and invest in amounts as small as 5 cents.
He partnered with Titus Kinyanjui, who has a background in finance, to handle the financial aspects of the platform, and Samuel Njogu was brought in as lead designer.
With the help of angel investors, the trio started building Chumz, an application that provides an affordable alternative for people to invest.
The first prototype was completed in 2020 and received an operational license from the Capital Markets Authority (CMA) by early 2022.
“The idea was to help individuals who are struggling to build a culture of savings and investment due to lack of discipline and the high initial investment required by most investment channels,” Njuguna says Mr.
Essentially, the platform passes the collected funds to licensed fund managers, who provide returns to the fund, and the interest is then distributed to individual customers.
The platform also leverages behavioral psychology to guide users when to save and invest based on their spending habits.
“For example, we designed the platform to encourage users to save some of the money they receive with mobile money, or to save when spending money on certain activities, such as eating out. We send reminders at strategic times during the month to encourage our clients to save and invest so they can make the most of their income,” says Njuguna.
Njuguna wants people to change their spending habits, which have sometimes relied heavily on predatory mobile loans to get quick cash, and instead invest in small amounts that can guarantee financial independence in the long run. He says it's not easy to focus on saving.
“The lack of basic financial literacy has forced us to create financial literacy content and partner with many organizations that practice financial literacy. We also need to create financial literacy content and partner with many organizations that practice financial literacy. We also recognize the barriers to investment and are breaking down this jargon to make it easier for everyone to understand,” said Njuguna.
He says this approach enables people who have never saved or invested before to save and invest, changing the perception that investing is only for a select few. .
“For example, a shoe designer from Ngala saved 50 cents every day and managed to buy work supplies. His biggest surprise moment was that small savings can mean a lot,” says Njuguna. says.
He said some parents are using the Chumz app to teach their children about finance, explaining how interest accumulates and the long-term effects of deferred gratification, and helping them plan their children's financial futures. He recently realized that he was using it to set goals.
Currently, Chumz has over 70,000 registered users. Compared to the continental average of 17 percent, Kenya's average savings and investment rates remain low, with only about 13 percent of the population engaged in savings.
Mr Samuel said he plans to enhance the app to encourage saving and investing by making it a fun activity.
“We are committed to achieving this by creating a gamified experience around savings and investment triggers tied to our clients’ lifestyles around money. We have also created a financial calculator to guide our customers on how to manage their funds on our website,” said Njuguna.
