A Level 300 Production by Adu- Sarfo Blessing
Africans have been pooling money together through communal savings schemes since time immemorial. From the traditional Susu in Ghana to the chama in Kenya, these systems have sustained families and communities. People of all ages now embrace ROSCAs as a lifeline for financial survival.
Many who join these groups expect their contributions to provide a financial safety net. They expect that the trust embedded in these system will protect them from loss. This story explores ROSCA and the hidden dangers associated with defaulting.
Source:AfricaLiberty.org
ROSCA is a tradition that dates back centuries, used by different African communities for various financial and social purposes. Today, in modern society, it is embraced as a tool for financial survival and community support. People join for various reasons.
Some say it provides a disciplined way to save money without the bureaucracy of banks. For others, it is a reliable source of emergency funds when unexpected expenses arise. Many also appreciate the social bonds and trust that these groups foster among members.
Aside from the financial benefits of ROSCA, these schemes also pose significant challenges. Some members experience emotional distress and financial hardship when defaults occur. The video below features market woman Sharon Akpalu sharing her painful experience after losing her savings during a ROSCA default incident.
“I never expected to lose access to the money I have worked so hard to save. I was hoping to get my money back to invest in my market business”, said Sharon Akpalu , a customer of the micro finance bank.
Defaults in ROSCA can range from minor financial setbacks to devastating economic crises, resulting in loss of savings, emotional distress, and broken trust. The inability to pay school fees after a default can cause children to drop out of school. There is also a risk of social exclusion and damaged relationships for members who are unable to recover from financial losses.
Unlike formal banking systems, there are no reported deaths from ROSCA defaults in Ghana. However, the documented complications include financial ruin, strained family relationships, loss of business capital, severe emotional stress, and the collapse of small-scale enterprises.
Hand counting various denominations of Ghana Cedi’s
People join ROSCAs for different reasons, including personal financial needs, community traditions, and social support. However, like any other form of informal financial arrangement, ROSCAs come with certain risks. If you decide to join a ROSCA, prioritize transparency and choose groups that operate fairly, keep proper records, and promote accountability.
Community meeting discussing financial matters
It's always important to save with credible banks.
ReplyDeleteReal talk: it’s sad but a bit soft. The Sharon Akpalu story is the best part .. you actually feel for her. But the headline promises to expose something (“unequal burden”) and the piece never really delivers that punch. It just tells you ROSCAs can go wrong and to be careful … stuff most people already know.
ReplyDeleteI think the "Unequal burden" comes in after a default. Taking Sharon's case as an instance , she had to carry the burden of the misplaced money even though it wasn't her fault. She carried all that by herself eventhough she wasn't the only one involved in the ROSCA . This makes the burden after the default UNEQUAL .
DeleteI think agreed consequences for breach of agreement should be set at the beginning of the ROSCAs . it'll reduce the rate of breach of agreement .
ReplyDeleteIs important to know the bank that we are saving in, some are rural banks some are commercial banks, some banks are all over the world but some banks are also just one branch around the world
ReplyDeleteWe should choose wisely
Credible banks are okay but sometimes the charges are not beneficial
ReplyDeleteI would rather prefer saving at the bank than doing this group susu, besides your money won’t be safe hands
ReplyDelete