Thrift collection, otherwise known as Esusu or Ajo is popular in Africa. It is a traditional method of saving and an interest-free lending tool that predates modern banking.

Usually, groups of people numbering between 5 and 10 and in some cases 20 to 50 gather and agree to make periodic contributions of specific amount to each member of the group on a rotational basis.

Let’s assume there are 5 people involved and they have agreed to contribute 5,000 naira a month. They will take number between 1 and 5 and the first contribution will go to number 1.

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So, on month 1, the group will contribute 5,000 naira each and give to number 1. This will be rotated until each member of the group has received his contributions. And they can start all over again.

It all looks so easy. No marketing. No paper works. You have access to funding at no cost at all to you. But there is always a problem. The Esusu culture relies on trust and social connection to thrive. What is needed for it to crash is just a single default.

For some unforeseen reason, one member of an Esusu group could be unable to continue his contribution after he has received his. So, he becomes indebted and the remaining group members lose faith in the scheme and it dies a natural death.

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For as many as Esusu groups that had existed, the story of their demise ends this way.

But then I stumbled upon a group of young men recently, that had been running an Esusu for up to a decade successfully.

And the interesting thing was, they were not the highly educated. The highest education some of them had was secondary education.

I wanted to know what the secret was. I enquired to know if they had not had any default troubles, and they said they did but they found a way to take care of it.

So below are 4 ways that this group used to distinguish their Esusu from the regular ones to make it survive that long.

1. Group Is Registered As Social Group:

The first thing the group did was to register their Esusu group as a club or social group with Corporate Affairs Commission. This was to help them open an official bank account in the name of the group.

It was also to ensure that members signatory to the account do not make withdrawals without recourse to the stringent procedures of doing so - which involves approvals from at least 3 members of the group who must append their signatures to a cheque.

2. Savings Is Long Term:

They made a mandate to save long term – one year. A member is free to save as much as he wants. And each month after he makes a payment, he takes a receipt to the treasurer of the group who will enter it in their record.

A member cannot have access to his fund before end of one year unless he wants to borrow it at a designated interest rate. And that brings me to the next point.

3. Credit Facility Must Not Exceed Contributions Already Made:

Any member can access credit after at least 6 months of consistent contributions. But he would have to pay 3% interest.

A member who chooses to get the credit will not access fund beyond his total contribution. Let’s say Mr. A has contributed up to 100,000 naira within the 6 months he has been paying and then decided to take a loan.

The group will not extend more than a 100,000-naira loan to him and the 3% interest is taken upfront.

If Mr. A is unable to continue the contribution after he accesses the loan, he has lost nothing, he owes the group nothing and the group has assumed no risks for having had him.

Credit is not extended to any one outside the group. 

4. Interests Earnings Are Shared Among Members At The End Of Each Year:

Because they are entrepreneurs, they sooner than later need some of the cash for their businesses at the lowest interest rate one can find anywhere.

So, at the end of the year when each member of the group receives his total contributions, the interest is also shared among them according to each member’s contributions.

One member of the group named Stephen told Bounce News: “We have been doing this for about 9 years. We found that the traditional method was always prone to abuse. A lot of us have had our fingers burnt through that method and therefore we decided to adopt this model, and it has been working.”

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