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New App Allows Investing Just Five Shillings To Earn Interest

With a mobile money account you can set financial goals and invest your money towards them, track progress and earn interest

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Kenyans can now invest as little as five shillings on their mobile phones, thanks to the new Chumz App. The app has been developed by Moneto Ventures Ltd in partnership with Nabo Capital, a Kenyan-based fund manager regulated by the Capital Markets Authority and the Retirement Benefits Authority.

The Chumz app, so named from the sheng word for money, enables saving money towards a given goal. With a mobile money account an individual or group can set financial goals and invest their money towards them, track progress and earn interest. To provide investment advice for investors, Chumz has partnered with Nabo Capital.

Moneto Ventures CEO Samuel Njuguna says the app will be made available for download from Google Play and Apple App Stores. Once registered, you can create saving goals as an individual or group. The app will then send prompts to the user to invest towards that particular goal and offer advice on investing based on spending habits. The app is authorized under the Capital Markets Authority fintech sandbox.

Mr Njuguna said research carried by the firm indicates that Kenyans have a “self-imposed” limitation that they can only save Ksh1,000 and above, which limits the savings potential. This is complicated by the many numerous lending apps that are fueling a consumerism culture and limiting investment solutions.

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“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,” says Mr Njuguna.

He said the research showed that Kenyans lack awareness on investment channels they could easily access and track their portfolio 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,” he says.

Mr 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 Ksh5 to enable them 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 noted.

Mr Njuguna says the Chumz app guide savers 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 behavioural psychological 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 Managing Director Pius Muchiri said there are about 200,000 active investment accounts in the capital markets compared to over 34 million active bank accounts, and bridging this gap would accelerate Kenya’s economic growth.

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“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,” Mr Muchiri says.

Mr Muchiri 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 Ksh300 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. The Chumz app will enable 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 tailored to their needs,” he says.

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BT Reporter
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