What You Need To Know About Traditional Savings Groups in Africa

Written by Jamborow on 19 November 2021.

Contributory saving schemes are common across Africa, especially in areas where access to banks and other formal financial institutions are limited. From Ajo, Esusu, Saccos, Vicoba etc.

They all provide a level of inclusion to the participants. Typically, the members of these groups, which often consist of but not limited to street vendors, small-scale entrepreneurs and rural population- take turns in pooling an agreed amount of savings to each participating member on a monthly basis and this continues till the cycle is completed and all members have collected a similar amount of savings.

At the end of a cycle, a new one is initiated and it goes on like that for as long as the group exists. However, based on the Global Informality Project research, it was found that there are other forms this informal financing system can take.

First, there are units that are aimed at mobilising savings but that engage in little or no lending.

Second, there are lending units that engage in little savings mobilisation.

Third, there are groups that engage in self-help finance and involve various types of savings, including rotating ones as well as those provided by licensed cooperatives.

The need to save, have access to funding and be part of a financially responsible community fueled the emergence of saving groups.

With Africa having 57% of its population unbanked it is no surprise the popularity these Saving Groups enjoy in the continent. Members can be from the same ethnic group or joined by geographic proximity and the structure of withdrawal and contributions varies from group to group.

Community Saving Groups In Africa

Here are some of the Saving groups across Africa and the countries they are operated in.-

Ajo is the name given to this scheme in South-Western Nigeria, the Yorubas in the west are said to pioneer this practice. A professional collector, the alajo, goes round to collect contributions, usually on a daily or weekly basis, and is paid a small commission for this service. It is very common among farmers and it sometimes goes beyond money contribution and extends to peer farmers working on one another’s farm during peak periods.

Esusu is a variation of the word Isusu an Igbo word from the South-Eastern part of Nigeria, which means to contribute. Esusu, like Ajo, serves as a source of borrowing in emergencies, it is also to grow one's savings and achieve a communal goal. It tends to have a clan-like nature when it comes to membership. Sometimes the contributions are daily without any maximum or minimum deposit. Members are allowed to put in what they can afford, the contribution rules vary as the groups vary. In some parts of West Africa like Senegal, this scheme is called Susu.

Adashe or Adashi is the Northern version of Ajo and Esusu, it operates outside the formal legal and financial systems and tends to function solely on an oath of allegiance and mutual trust.

SACCOs is an abbreviation for Savings and Credit Co-operative Society. It is an informal, member based financial institution which operates on co-op values,honesty and trust. They are democratic co-operative governed, owned and managed by its members who share something in common like, being from the same church, social group or living in the same community. People join SACCOs to put their savings together and provide loans to their own members at reasonable rates. The little interests on the loans are used to cover the cost of administration. The members have to pay a mandatory minimum monthly contribution. Unlike Ajo, SACCOs are generally regulated and registered, but like Ajo they offer simple, accessible and reliable options for people to save and raise capital for their needs. SACCOs have about 14 million members in Kenya, and according to AMFIU (Association of Microfinance Institutions of Uganda) 2016 report,, there were 2,000 MFIs and SACCOs in Uganda. An interesting aspect of SACCOs is that members on joining are required to buy shares, making every member an owner of the cooperative. Apart from Kenya and Uganda, SACCOs are also found in Tanzania, Ethiopia, South Africa, Malawi.

Tontines are informal, traditional savings groups, they give women across Francophone Africa the opportunity to set aside money on a regular basis with the aim of accessing a larger amount through loans after a period of time. Every month, the women contribute an agreed sum to the Tontines, at the end of each month one of the women in the group takes the bulk contributed as loan. With this, the members can pay for medical expenses, children’s school fees or use as capital for a new business. Across Africa there are 30 million women who save and access funds through this system.

VICOBA stands for Village Community Banking, it is a tailored microfinance program designed to provide credit to low-income people who need capital to start a business. The aim of the program is to change lives and communities at large. Groups of 25 to 50 people, mostly women come together under the program, which allows them to combine their savings to create a community-based bank. VICOBA is also called “Mata Masu Dubara” (MMD),which means ‘wise woman’ in Hausa. VICOBA was founded in Niger in 1991 but is now operational in Tanzania, Zimbabwe, Mozambique, Eritrea and other parts of Africa. The adoption of this system is based on its suitability and how effective it is at controlling or checking developmental initiatives through efficient operation of savings and credit services together with appropriate Income Generating Activities (IGA). As mentioned above, Tanzania is one of the countries where the VICOBA program has seen great success. Research by Mzumbe University in Tanzania shows that since the inception of the scheme, women in Tanzania reported increased savings and more support for their children’s education as a result of their involvement in the VICOBA program. The concluding report states that- VICOBA improves the welfare of its clients and has the potential to be used as a platform for providing health-related services to members from hard-to-reach communities.

These Rotating Credit and Saving Associations (ROSCA) play a big role in the development of the community, they have shown to encourage empowerment and promote financial stability.

The way forward is getting them digitized to broaden their reach and incorporate other functions that will help the members get more access to loans from formal banks and access to funding from bigger organizations.

With our goal at Jamborow being to reduce the unbanked population in Africa, we intend to keep being the conduit for members of these saving groups to access diverse services in the formal sector.