Kenyans who grow from social group to chama billionaires

The People

Looking at the Norwich Union Towers at the heart of Nairobi’s Central Business District would be difficult to believe that it owes its ownership to nothing more than a meeting of convenience between friends.  But as Development Agenda found out, the  eight storey building that stands directly opposite one of the country’s five-star hotel is among the assets of a group of close friends who later formed an investment group, initially with the aim of intensifying their social bond.

The eight-storey building is owned by the Norwich Union Properties Limited, a public company that has evolved from a 33-member chama at the All Saints’ Cathedral Church, to  a public company with over 80 members and assets worth over Sh2 billion.  According to the Norwich Union Properties Ltd General Manager Michael Maina, the group that was born from a farewell party is now worth over Sh2 billion.

“It was actually a meeting of convenience in 1995. We were holding a farewell party of Retired Bishop Peter Njenga who was leaving All Saints’ Cathedral to Mount Kenya.  This, we did successfully after which the members  realised that they did not know each other well. They then planned to get together more often. So we started as a social group,” said Maina.

The group initially met every Tuesday and members would contribute Sh10,000 per head in every meeting. Soon enough, the investments became huge and members suggested that they begin investing in the market.  “At that time, we had a real investment group set up with a chairman, and other officials. We  started with a small nucleus and once we observed progress, we invited friends and the group expanded.

Read: Chamas that make millions in Kenya

But the members of the original nucleus would vet the people who wanted to join.  If any of the original members had an issue against a new entrant, especially regarding integrity, the new member’s application to join the group would be nullified,” explained the general manager.   By 1996, the group’s investments had grown significantly as the members, upon regular consultations within the group, would use the investments to buy and sell treasury bills and treasury bonds.

“We then thought of formalising our loose relationship by forming a company. Our first company was formed in 1996 and it was called Critical Mass Group Limited (CMG) Limited,” he said. But as Maina explained, the group did not  stop there.  They took advantage of every opportunity that knocked at their door. For instance in 1997, those  importing cars were few and they lurched on to this idea to make money.

“There was an order from an NGO that wanted some cars and one of our members suggested that we consider the opportunity. But in group, there were some for and those against the idea.  We, thus, chose not to use the original company for that particular deal. Members agreed that we create another company that would take care of the new venture that we thought was riskier than what we had been doing.

Then Critical Mass Growth Investments (CMGI) Limited was formed. That new company became the vehicle for investing in more riskier investments,” Maina added.  After this, any new contributions, which were still weekly, became a capital injection to the businesses.   A confident Maina, shared how in 1999, the company made a great breakthrough in the real estate industry, which he says is a viable investment at the moment.

“The Norwich Union building in Nairobi’s Central Business District was up for sale and it was brought to our group meeting. At the time, the building was selling at Sh115 million but in our kitty, we had only a capital of about Sh70 million. The founders then decided to open a company that would take care of the real estate investments. And there, Norwich Union Properties (NUP) Limited was born.

But we had to borrow Sh45 million. Backed by the other companies that we owned, we managed to secure a loan from the bank. We now became the landlords of this building,” Maina said. Since then, Norwich Properties Ltd has continued to invest in real estate. In 2005, the now public company invested in Sh62 million Ratna Apartments in Lavington.

A year later, there arose an opportunity to buy a commercial building, which led to the group’s acquisition of the Sh66 million Libra House along Mombasa Road. The group bought another property in the same area at Sh250 million.  The story of NUP Ltd paints a picture of the essence of investment groups, a facility that Maina advises Kenyans to take seriously as an investment model.

Another group that is also using the same model shares their story   Established in 2007 Godly United Families Investments (GUFI) Company Ltd, which started off as a college group of friends who used to meet regularly, today owns several properties across the country with investments in real estate and pharmacies.   “The group was started in 2007 by ten couples who were friends in college.

The formation of the group was prompted by desire of the members to maintain fellowship with each other and also assist each family to grow economically. The condition for admission into the group was that at least the spouses be known to one of the couples in the group,” Dr Isaac Mugoya, the group’s chairman told Development Agenda. The group has, to date, maintained the same number of members.

Mugoya disclosed that the group is a registered member of Amalgamated Chama Limited (ACL) and owns shares worth Sh1.4 billion has purchased a piece of land through ACL worth Sh800,000, has Sh750,000 three acres of undeveloped land in Isinya and a pharmacy currently valued at Sh2.5 million.