Tuesday, 09 October 2007

• “I Would Chop the Money” - African Microfinance 101

  When we first hired house help, and I started dashing our guards, I asked how often they wanted to be paid, and the answer was always monthly.   “If you pay me today, I will chop the money,” they said.  It’s a phrase I would hear over and over that first year, “I will chop the money.”  Chop is the word for eat, and this phrase literally means “I would eat the money,” or in western terms “fitter it away.”  So paying or dashing them only monthly allows them to save up for the bigger purchases.  Its not that different from another savings plan called the Susu.  

  [RHS: picture of LeeBa]

  Susu is derived from the Nigerian ethnic group[1] Yoruba word "esusu," which roughly translates to "pooling the funds and rotating the pot."[2] Though I had heard of Susu, it wasn’t until a few weeks ago that I learned how widespread the practice was.  Last spring, our second wife the vegetable seller, whose name is LeeBa, started a second business, selling “provisions.”  Provisions are the little things that everyone needs, like salt, cooking oil, tomato paste, canned tuna, mayonnaise, and spaghetti…, and there right next to her vegetable stand, she set up a stair step  provision stand, which she packs in boxes every nights, and sets up every day.  I buy most of our provisions from her, and if I need something she doesn’t carry, I ask her to pick it [up] for me.  Well when I returned this fall, the provision stand was gone. I asked what happened.  LeeBa told me, in true Ghanaian stoicism, “It is finished” meaning she had sold out.  I asked what happened, and it turns out she had earned $300 from it and along with another lady, had invested in another business, something that could make them more than provision money, but something happened to it, it got lost, or the other woman, she had needs, or whatever the case, “the money, it got finished.”

  “How do you feel about this?” I asked, “I’m okay with it,” she said, and then added “…now,” which was telling.  In her eyes I could see tears forming, but she brushed them away, and I didn’t bring it up until a month later, when a fully stocked provision stand showed up.  “WOW! I said, as I picked out my provisions, “How did this happen?” I asked.

  [RHS: LeeBa and her provisions]

  “My Susu,” she says and then adds for my benefit, “an investment club.”  She along with four others formed a Susu Group, or rotating investment club where each month the five of them put in 200,000 (or 20USD), and then it all goes to one person.  This Susu Group runs for five months and then disbands, after each has collected their share.  LeeBa explains to me “its the same, 20, 20, 20, 20, 20, one million.” She is mixing the old and new currency, 20 being in new Ghana Cedis, and one million, in old.  The dexterity in which Ghanaians flip back and forth between old and new makes my head spin, but she is making the point that they get back what they put in, and laughs that I don’t seem to get it.  She and Miriam, the fabric seller in the next stand are talking to each other in the local language, pointing and laughing at me.  I sit in the plastic chair, smiling, clueless.

    [LHS: Eric driving]

  Later, I ask Eric, our driver, about Susu, “Do you use?”

  “As for me, I do not use,” he says.  “I do not trust them, they will chop my money.”

  He has heard stories of Susus running off with their accounts, but he is talking about a different form of Susu, a Susu Collector.  He explains, “The Susu [collector], he comes every day to collect money, and by the end of the month, it comes back to you, but for one day,”  meaning that if you pay in for 31 days, the Susu returns 30.  Sometimes the Susu collector has a stall, other times they come to your stand every day and collect.

  They are also invisible. Eric and I are running errands, and the next day, when I ask when he will take me to the Susu in Osu, he says.  “He was there, I’m telling you.  He was there at the shop.  He had his collection pad, and putting in the check every day you put in.”  I didn’t see the man, but then there is a lot that goes on that I miss.

  [picture of John Mark & Loreli]

  Our Ghana friends John Mark and Loreli–the Free Methodists missionaries from Canada, have been running another form of microfinance in their community.  Ok, its really just Loreli who has been working with the market ladies of her community.  You can read about her adventures here: [http://www.xanga.com/Crossing_Cultures].  What I like seeing is how passionate Loreli is about it, how it wasn’t so much about the money, the repayment, or what it was used for, as it was in teaching the principals behind it.  In fact when one lady skipped a few of the classes, she was dropped from the program, and Loreli had to endure much pressure to allow her back into the program.  She didn’t.  That happens a lot here I’m told, when obrunie makes an unpopular decision and the community reacts.  Mary Kay, of “The Jackson Four” fired her house help, and later had to endure several hours of pleading, and begging, same with our friends the Jernigans, who even were honored with a few visits from the Chief.  In our case, when I let John the sleeping guard go, or when Vital, our Rwandan househelp, “stopped his work,” or quit, none of the other staff was sad to see them go.  They had not been carrying their weight for a long time, and had been dropped from the community of care in our household.

  In fact the week before Vital stopped showing up, he had asked for a three month advance, a loan he called it.  The word loan is often interchangeable with the word “gift” here, and unless you make the expectations clear, that is just what it becomes.  Over the last year, I too have been running a small scale experiment in microfinance, as I helped finance the various projects of our guards, like loaning 700,000 (70USD) to Daniel, for his Auntie’s funeral, or adding 500,000 when his daughter died.  Emmanuel used to borrow, and repay, borrow and repay, in fact one time Vita, his wife, told him to repay the small loan, so you can borrow more. At the time I think he owed roughly 2USD.   But our most frequent microfinance client is the relief guard, Stephen, who currently has 500,000 (50USD) on loan.  I hadn’t been back in Ghana two hours when he asked to “borrow me some small money for school fees.” It was a half his month’s salary, and as he explained his son was entering school for the first time. He has a daughter a few years older, and warns “she will stop the school, if I do not have the school fees for the boy.  I don’t know if he is playing me, if the threat was real, but I loan him the money.   Stephen has always repaid loans, but this time, it is more of a struggle.  I had to laugh sometimes last year, because he would repay the loan on Monday, and by that Friday, ask to borrow again, and I wondered if he borrowed the money out of need, or just to show that I trust him. 

  Stephen is not the only one gaining trust, just last year one of the major players in banking here, Barclays, teamed up with the Ghana Cooperative Susu Collectors Association (GCSCA) to launch a more formalized microfinance scheme to help the smaller Ghanaian traders that work from road-side stalls or move about in the marketplace. Barclays figures that independently, “their income would not qualify them for a bank account, but together they account for more than 110 million Euros per year in Ghana alone,”[3] and Barclays wants a part of that action. 

   

   

  Initial results look promising; the Barclays website states that by the end of 2006:

  • Barclays had opened over 200 accounts for Susu collectors and over £50,000 was given out in loans, all of which was repaid
  • Barclays had supported over 100 Susu collectors with financial management training and provided 250 of their clients, the small market traders, with basic financial awareness training
  • Over 80,000 market traders had improved access to banking (indirectly via the Susu collectors who are now banking with Barclays). 

  Barclays is currently reaching out to over 1,000 of the 4000 registered Susu collectors in Ghana and plans to expand elsewhere in Africa.  It seems that microfinance options are all over the world.  Man Hau Liev from the Center for Refugee Education in Auckland lists more than thirty different terms for such money pools from countries all over the world: Latin Americans refer to them as Tandas or Quotas; Koreans call them Kyas or Kaes; Gambians and Nigerians refer to them as Tontines, and in ancient China, there were called the Hui, a sort of mutual financial association, that can be traced back to the middle of the Tang dynasty (618-906).[4]

  Back in our section of Accra, there are 22 days left until the last of the market ladies in this Susu Group will collect her share.  Its Miriam, the fabric seller with the stall next to my second wife.  “What will you do with your share?”  I ask.  As I’m asking this, I wonder what plantain seller did will hers, as her shop is unchanged. “Invest in my material for my shop,” she says.

  “All of it?” I ask, she smiles and says nothing.

   

  ---

  [1] Waite, Craig, Our ABD house guest

  [2] Huggins, Sheryl E.,  Black Enterprise, “Pooling community dollars: a 'susu' can mean money for your business - rotating credit associations,” May 1997, http://findarticles.com/p/articles/mi_m1365/is_n10_v27/ai_19340478

  [3] Do You Susu?, 20 Feb., 2007 http://knowledge.allianz.com/en/globalissues/microfinance/alternative_finance/history_moneypool_susu.html

  [4] Do You Susu?, 20 Feb., 2007 http://knowledge.allianz.com/en/globalissues/microfinance/alternative_finance/history_moneypool_susu.html

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