Can Traditional Savings Group Still Work In Today’s Economy?

[SPIDERMAN008]

If many partners are related to the same business then they will be forced to continue contributing money from the profit to the combined savings. If someone gets the full fund for the first time in the beginning even then he will not be able to skip the time of giving his money later even if he wants. Another way to do this is if someone works in the same company and there is a trusted combination between them then they can easily manage this combined savings scheme if they have a monthly salary. But in both these ways there is no guarantee that each member will be able to contribute regularly. Because the business may not have the same profit in all months. Again an employee may leave the job or he may suddenly have financial problems. So before starting anything like this one should be aware of the possible risks.

[BTC FutureKing]

If many partners are related to the same business then they will be forced to continue contributing money from the profit to the combined savings. If someone gets the full fund for the first time in the beginning even then he will not be able to skip the time of giving his money later even if he wants. Another way to do this is if someone works in the same company and there is a trusted combination between them then they can easily manage this combined savings scheme if they have a monthly salary. But in both these ways there is no guarantee that each member will be able to contribute regularly. Because the business may not have the same profit in all months. Again an employee may leave the job or he may suddenly have financial problems. So before starting anything like this one should be aware of the possible risks.

It is exactly like this many people work in the same business so it is difficult for them to maintain a balance in monthly savings because there is no guarantee that everyone is ready to give a monthly amount because sometimes or due to some difficulties many risks can arise.If it is difficult to maintain these savings then there are also many benefits because a large amount is collected.Each person can start their own business or invest. Everyone can be financially strong.If there is a balance in monthly savings it is also a very beneficial scheme.But it is not right to end this scheme due to any loss or payment of money.Rather everyone should support the people and if for some reason the money is not paid then they should try to fulfill it next month.

[Mr_Brilliant$]

This ajo or esusu is best when it's among trusted people. You don't know who is who when you invite a stranger to join you to do it.

The technology is not even of concern but the trust involved. We have let's say 7 persons all contributing money. The first person gets early access to the funds while the last man has to keep saving until it gets to his turn. Along the line a members fails to save, what then happens? The trust is mainly the issue.

I think I have stumbled on something like this online with a bank. Can't remember. It's actually good that it's online. But either of them have one thing in common and that's the trust I was pointing out.

[yixichloro2xx]

This traditional group savings still happens in Nigeria. But it's mostly amount traders in the market, since they have alot of cash on their hands, so they can be contributing a fixed amount like ₦1,000 per day till it's time for them to get their own share. We call it Ajoh or Esusu in Nigeria. But the downside in this type of traditional savings is that , the holder ( that is the person that act as the collector) can embezzle the full money. Around 2011-2012 my mum used to participate in this Ajoh, so the collector was living the same compound with us in Delta State. So it was now the turn of another woman to receive her own share , our neighbour who was the collector ran away with the entire money. The total amount was around ₦1.2m to ₦1.5m then. They later found out that she ran to Lagos State, so everyone then shift their focus on my mum thinking that both of them planned it together since both of them  were neighbours and close friends. Eventually, my mum found a way to pay back around 600k to avoid any issues. I don't like this method of savings because I hardly trust anyone with my money. For your own peace sake, save your money in your personal account.

[Berry2d]

This ajo or esusu is best when it's among trusted people. You don't know who is who when you invite a stranger to join you to do it.

The technology is not even of concern but the trust involved. We have let's say 7 persons all contributing money. The first person gets early access to the funds while the last man has to keep saving until it gets to his turn. Along the line a members fails to save, what then happens? The trust is mainly the issue.

I think I have stumbled on something like this online with a bank. Can't remember. It's actually good that it's online. But either of them have one thing in common and that's the trust I was pointing out.

Before accepting to participate in any of those associations they will carry out their findings to be sure they are dealing with someone trustworthy but if that trust is destroyed they will be faced with no opinion than to pick some of your belongings to recover their money.
Just like said before,  such is never good with people we don't know incase such incident occurs why others have contributed for him
The life of humans is one that is very difficult to understand in a hurry,  one may appear very calm welcoming and nice but deep down he is a beast in human form.
To avoid losing money on osusu or other's, we shouldn't do it with a stranger you don't know.

[programmer3666]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

In my locality, the traditional group savings still works, it is popularly called Ajo and a very large number of people still trust each other but you and I know that trust can't really solve the issue of inflation. One very fascinating thing about it is that the system of that group contribution or savings runs on social pressure, you will have no choice but to contribute your reputation and dignity depend on it. You will not want to put yourself to some level of shame among your neighbours or give them reasons to look down on you. So that part still exists, and it has not changed but if you happen to be that last person in the cycle to collect the contribution in about 12 months then it is possible that the money you get might end up buying less than what you actually contributed in the first place so in that case the group savings didn't fail but the economy itself did.

[Cheema02]

Traditional saving groups is still very much effective even in our economy today because it is what really help most local market traders and small scale business people to save up some money from their proceeds that will help them to either stock up their market or sort out other bills. This method has always been helpful to them because it encourages saving. To avoid the risk that is mainly a particular member failing to contribute for others after he has taken his, the best way is to save with group of people of serious and like-minds, the people in the same business that you know very well and people driven towards achieving the same purpose to which the group was made.

Savings are very useful for our present and future lives. For example, if we have an emergency in the future and we have savings, we can easily manage that time, but if we don't have anything, this situation becomes the worst for us. In this regard, a lot of savings groups work for people and guide them on how to manage their assets, because saving is not an easy task for anyone. So people invest in different saving groups, and these groups buy more stocks and provide them a fixed return annually.

Trust is the main connection and key of any business, and if you gain the interest of your customers, your success is guaranteed. So these groups first build trust in an area and then start their business. Can these groups adopt the digital system of mobile banking? I think proper management can control the system, even in documentary form.

[Queentoshi]

In my locality, the traditional group savings still works, it is popularly called Ajo and a very large number of people still trust each other but you and I know that trust can't really solve the issue of inflation.

When the members of these sorts of contribution groups do not know themselves very well, the reason why they can still get involved is because they trust the organizer of the group. So sometimes this sort of group function not because the members trust themselves well but because the members trust the organizers that the organizers know the people who they've allowed in the group with them.

One very fascinating thing about it is that the system of that group contribution or savings runs on social pressure, you will have no choice but to contribute your reputation and dignity depend on it.

I will not join this sort of contribution group because I believe that the other members are very concerned about their reputation and dignity, I will join for a reason more than that because from my little experience I know that some people care less about the reputation they have or how others see them in any environment they live in, and if you have such people in such a contribution group, they would certainly be a problem.

[Fiatless]

This ajo or esusu is best when it's among trusted people. You don't know who is who when you invite a stranger to join you to do it.

The technology is not even of concern but the trust involved. We have let's say 7 persons all contributing money. The first person gets early access to the funds while the last man has to keep saving until it gets to his turn. Along the line a members fails to save, what then happens? The trust is mainly the issue.

I think I have stumbled on something like this online with a bank. Can't remember. It's actually good that it's online. But either of them have one thing in common and that's the trust I was pointing out.

It is popular among African people. Even Africans in the diaspora engage in this form of financial contribution to save and have access to bulk money. But the arrangement should involve only trustworthy people. I have seen several cases where someone has access to contributed funds and refuses to contribute for others.

It would be safer to save in banks since it is more reliable. There are also banks that could give low-interest loans. I would prefer to deal with established or registered financial institutions rather than engage in this informal arrangement.

[Natalim]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

You have mentioned the risks and with those risks I don't find it attractive, what's the reason for saving as a group, so someone could borrow from the pooled funds? This is also popular in our country, members contribute, at the end of the month there's a raffle and someone gets the total amount and then they start saving again. The problem is if someone fails to contribute the amount is no longer complete, leaving those whose turn comes later getting less than what they are supposed to receive. This does not look like the best way to save money, better put it in a bank, and if you want to borrow, borrow from a financial institution.

Those who will receive first are only the ones who will benefit the most, while those late receivers will surely get delayed payments because of incomplete savings, this is mostly the case and the biggest risk when there is a group savings that aims to provide financial support to the one's needing it the most.

While this could be helpful for those who are in constant need of funds, but this kind of group saving is very risky and stressful especially if most of the members have financial attitudes when it comes to giving monthly contribution.

[mirakal]

This ajo or esusu is best when it's among trusted people. You don't know who is who when you invite a stranger to join you to do it.

The technology is not even of concern but the trust involved. We have let's say 7 persons all contributing money. The first person gets early access to the funds while the last man has to keep saving until it gets to his turn. Along the line a members fails to save, what then happens? The trust is mainly the issue.

I think I have stumbled on something like this online with a bank. Can't remember. It's actually good that it's online. But either of them have one thing in common and that's the trust I was pointing out.

When it comes to saving money, traditional or digital way, trust will always be the major issue. Some will stick to the rules and fulfill their promise, while others just take it like it has no serious impact to them. They will pay if they can, they will stop if they want, and these are the kind of people that should be avoided when it comes to saving money as a group.

But the real problem is, their true colors get only reveal after they have received their share. Strangers or not, its really hard to establish trust when money is the main thing involved.

[Woodie]

In the absence of technology, this method of saving does still work and the best part about this is that a trusted member is always elected to handle the funds more like an escrow... Besides I don't think if we look around the world everyone is using the latest financial technology to transaction, so basically somewhere somewhere people are still using these traditional method's, and if they work I don't know why they would stop now.. but of course that's too much trust in one person.

[freedomgo]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

How will we know then that someone is capable to keep up with his contributions? We don't just have to rely on his personal background or whatsoever, we have to really witness if he is actually paying on time or makes different excuses when its his turn to contribute his share.

Members take turns in receiving the collected money, and after that, they just ran off and hide, and totally forget their obligations to the rest of the unpaid members. That's one thing I hate about it.

[Jostern]

People are still making this contribution and I believe it’s actually working for them, well I don’t know what part you want technology to come in by keeping money in the bank to make contributions for different individuals in making that contribution, I’m just wondering if people who are doing that contribution aren’t keeping their money in the banks because they have a Treasurer who keeps the money, however I have never been involved in such contributions, because I feel like I might end up not getting contributing for, and I would definitely get disappointed because sometimes it’s difficult to deal with humans, so I know people are still doing it and it’s working for them, there are some you don’t take your money by people contributing for each person at the end of the month, there is also some of this local contribution were you keep saving with a group of people at the end of a given interval of end of the year everyone have to take their own quota of contributions, I’m completely sure people are still making this contributions and it’s helps them in a long term.

[traderethereum]

The risks will be big because no guarantee if the collector stay after all members deposit the fund considering the fund will be big. That could tempting to trick the used of the fund for their own benefit. I have seen this happen in many environment here and make distrust from people to join. The group savings could be a reliable source of financial support people who struggle to access bank credit if they know how to manage it.

[Coin_info]

How will we know then that someone is capable to keep up with his contributions?

Only people with a stable source of income will be allowed to join the group savings, members may be required to specify their earning for others to know their eligibility. But there's another risk that many people may ignore which I have seen many times happen around which is where the person who is acting as escrow for the money contributed disappears or relocates out of reach of the others. Sometimes to avoid all these, just learn to save money on your own.

[DubemIfedigbo001]

Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

This sort of contributions haven't really gone very digital, it still operates hybrid. Digital platforms like Whatsapp is used to manage the contributions but the organization executive does offline KYC for every of it's members to ensure they've collaterals that can offset the contributed amounts if they end up not paying. If everything is done only digitally, people can abuse it easily.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

When you say financial support, do you mean loans?
Firstly, the kind of savings group that gives out loans isn't the one you described, rather it's the group that every member contribute certain amounts weekly/monthly and keep it for financial dealings of which everyone gets their capital, as well as profits(with respect to amounts contributed) from financial activities at the end of the savings period.

If that's the case, then savings groups wouldn't give members huge loans unless they've valid collaterals, but they can manage soft loans based on your credit record. Another advantage is that it's collateral evaluation process cum funds distribution is faster compared to bank loans.

[Bigjoe33]

 But on a second thought I think there could be a remedy or ways to limit or manage this risk by integrating  a banking system into the platform, which align with banking  orders or laws that automatically withdraw money directly from users bank account when they fail to pay up  their own quarter after receiving money from others.

This is a nice suggestion and can go a long way in reducing negative acts by members who planned to run away with other people's money after they must have collected theirs. At least, the back helps you directly withraw from your avoid if you fail to pay up, and I believe that there would be a deadline for such automated withdrawal of funds.

But still, this does not eliminate the risk completely. We could still have people who are not civil servants, that do not receive money directly from the government which makes them difficult to change there bank account. Some people can still intentionally change there back accounts and begin to do there transactions with another one, completely ignoring the former which still makes it difficult to track them and retrieve the money. Still thinking of ways to completely eliminate the risk involved, because it's a really good means of savings.

[demonica]

This is also done digitally. Instead of paying money with paper cash, digital or online transactions can already be used. But if you're asking about a certain middle man who'll act as the intermediary and will handle the funds collected, I'm not sure whether banks or other platform would consider organizing something like this because it's a lot of risk. Just like with the traditional way, what if the person run away after taking her turn of getting the money and won't continue saving up for the rest? The middleman would have to cover up for this for the other members. So I think, rather than doing this with a group of people, there are digital banking that offer daily interest to encourage people to save.

[davis196]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

This is an extremely primitive form of finance. Banks are way better than these forms of group saving(and I'm not a fan of traditional banking). You give small donations every month for a one year(or more than one year) and the whole "savings group" collapses for some reason, just before it's your turn to receive the gathered amount of money? Does it seem fair? No. Such "saving groups" cannot last for long, because they are built upon trust and voluntary contributions. The system would fall apart, once someone start abusing it.