A few years ago, three friends Njogu Kinyanjui, Titus Marenye and Samuel Njuguna came together to launch an application that would enable people to save and invest small amounts of money.
In a country where a majority of the working population earns no more than Sh50,000 a month, the trio felt that most of the investment tools available in the market had high initial deposit requirements that discouraged willing individuals from investing with them.
Leveraging on their backgrounds in computer science, finance and technology, the three thus developed an application dubbed Chumz that would enable anyone to save and invest with as low as five Kenyan shillings.
“The idea was to help individuals who struggled with creating a savings and investment culture due to lack of discipline and the high capital requirements of most investment channels,” said Njuguna, co-founder of Chumz.
In 2022, they secured a license from the Capital Markets Authority (CMA) to enable them to channel the funds collected to a licensed fund manager who would then offer a return to the fund, and the interests thereafter distributed to individual clients.
The platform would utilize behavioral psychology to guide users on when to save and invest based on their spending habits.
When a user gets a discount on a purchase for instance, the app prompts the user to invest the money they have received as a discount, instead of spending it elsewhere.
“For example, if cooking oil was going for Sh500 but a customer finds it is on discount for Sh400, they can save the Sh100 difference,” posed Njuguna.
The same applies when users negotiate for lower prices. They can save the difference between the marked price and the negotiated price.
“Psychology wise this makes sense because the user had planned to spend the money anyway,” noted Njuguna.
The app sends alerts to users when they are in places where they are likely to overspend, such as on outings.
“A user in a pub for instance can get an alert which will help him or her to avoid over indulging in consumerism,” stated Njuguna.
It also has a group functionality for merry go rounds (chamas), that sends an alert once one member makes a deposit, to encourage other members to follow suit.
The tool also sends reminders at strategic times during the month to encourage clients to save and invest so that they can make the most out of their income.
Titus Marenye, co-founder of Chumz, notes that getting people to change spending habits that have sometimes pushed them to rely heavily on predatory mobile loans for quick cash, and instead focus on saving small amounts of money that could in the long run guarantee financial independence has not been easy.
“Basic financial literacy is lacking and this has meant that we have had to create financial literacy content and partner with a number of entities that do financial literacy. We have also recognized that financial jargon has kept many retail investors from investing, and we are breaking down this jargon to make it more accessible to everyone,” notes Marenye.
He says these approaches have helped even the people who have never saved or invested before to do so, and change the perception that investing is only for a select few.
“For instance, a shoemaker in Ngara called Maina would save Sh50 daily until he managed to purchase his work equipment. His biggest aha moment was when his small savings amounted to something substantial,” notes Marenye.
Njogu Kinyanjui, co-founder of Chumz, says they have also recently noticed that some parents are using the Chumz app to teach their children about finance, how interest accumulates, the long-term effects of deferred gratification, and how to create future financial goals.
“Eliud, a father of 3, has been using the app to save for his kids and train them on how money grows,” poses Kinyanjui.
Currently, the Chumz app, which is available for download on Google playstore and the Appstore, has over 150,000 registered users.
Compared to the continental average of 17 percent, Kenya’s average savings and investment rate is still low, with only about 13 percent of the population engaged in saving. Samuel says they plan on enhancing the app to encourage saving and investing by making it a fun activity.
“We are working on achieving this by creating gamified experiences around saving and investment triggers tied to the clients’ lifestyle around money. We have also created financial calculators to guide clients on how to manage their funds on our website,” notes Kinyanjui.
