Ledger-keeping App ChamaPesa Targets Social Saving Institutions with Blockchain Technology

Micheal Kimani Bitpesa
Micheal Kimani, co-founder Chamapesa

There is a new blockchain ledger-keeping app in town. Dubbed ChamaPesa, the start-up targets social saving groups aka Chamas in Africa using blockchain technology to create a platform where groups can move their records from traditional systems that are mostly cumbersome and costly.

A little housekeeping before we dive into the app’s offerings: blockchain, a buzzword that has hit the internet and the business world in the last half a decade, is a shared and distributed ledger that enhances recording of transactions and keeping an eye on assets in a business network.

Assets range from tangibles such as buildings and cars to things we cannot touch such as intellectual materials like patents and copyrights. Blockchain allows the tracking of assets in a network, cutting cots and eliminating risk in the end process.

ChamaPesa is convinced that traditional methods of recording transactions and tracking assets are flawed and expensive. For instance, participants in Chama networks keep their own ledgers, among other records. The pricey aspect of this arrangement is based on the fact that these institutions need additional players that charge them for their service.

At the same time, involving third parties gives rise to delays in executing agreements, not to mention extra staffing requirements to keep up with ballooning ledgers. The arrangement is also subject to vulnerabilities should a central system such as a bank fall victim of hitches such as a cyber-attack.

ChamaPesa will give participants the ability to share a ledger that is up to date where participants in a network will act as publishers and subscribers. Furthermore, each Chama can receive or send a transaction to others, and data is updated across all Chamas in the network as it is transferred.

“Members all have access to the same set of records, because the blockchain keeps a copy of each. So, a member who happens to be out of town or misses a meeting, can still participate remotely. The team modelled the app around the existing structure of Chamas,” reads a statement from ChamaPesa.

At the moment, the start-up will deploy blockchain on two levels: local and global.

On a local level, ChamaPesa says, “Each Chama that is created will have its own blockchain that is only shared by the members of the group. So, it is small, lightweight and not exposed to the public. The chamas and its members hold their own data on their local blockchain. This local chain is spread across all their devices. So, the mini-ledger is encrypted and stored as a copy on each member’s phone.

“Unlike bitcoin whose blockchain is many gigabytes, a Chamas blockchain will only be a few megabytes. Because there are less than 100 people and it won’t be making blocks every 10 minutes. They might be once a week, or once a month depending on the Chama.”

Globally, ChamaPesa asserts, “Some kind of data need to be globally accessible. This is because ChamaPesa will allow Chamas to interact with each other – a model that exists today in Kenya with Sacco societies. There are 3 levels of cooperatives – primary, secondary and tertiary. Primary is a typical Chama or investment cooperative. Secondary is where several Chamas or Saccos register a Sacco society whereas tertiary is a national level cooperative organization that has lots of Chamas and Saccos as members.

“So, Chamas, while they may be singular, sometimes organize and do bigger things together. ChamaPesa will use a global blockchain to link individual Chamas.”

Since duplication of effort and need for intermediaries are eliminated within a blockchain network, the system stands a big chance of alleviating economic constraints for Chamas. Moreover, participants will be less vulnerable since blockchain applies consensus to validate information. In other words, all transactions will be secure, authentic and verifiable.

Chamapesa hopes to bolster saving habits by providing its technology service and a customized app to Kenyans and Africans at large. You can also check the founders video linked below.