Creating financial stability through daily contributions
Isusu, a daily contribution which became popular in the South-East after the Civil War, has metamorphosed into a thriving informal bank. Now, both rural and urban dwellers, grow their businesses from Isusu, writes IGBEAKU ORJI
Mr. Emeka Onyekwere, a middle-aged tailor based in Umuahia, Abia State capital, walked into the second floor of a two-storey building housing the company that provides the daily savings service.
When he could not find the collector in the office he called her on the phone and they agreed on a where to meet. Onyekwere wanted to draw at least N2,000 from his savings to pay for the repairs of his sewing machine.
“I have spent everything I have. My only hope is the savings/contributions I have made. I need the money now to complete the repairs on my machine, once l resume work I will continue with the saving,” he said. It is as simple as that. One will be paid on demand without the hassles associated with formal banking.
Have you ever wondered how a family of seven survives, especially in these hard times? With the peanuts paid as salaries to those who are even employed, while many are either unemployed or underemployed. In fact, in most cases the salaries are not paid, yet people find a way to survive. Man’s survival instinct has never been so tasked. Paying house rent, children school fees, feeding and in some cases building their own houses with seemingly meagre income or menial jobs, most Nigerians have embraced the daily savings known in many areas as ‘Isusu.’
Isusu has come a long way. The growth of the credit and thrift system popularly called Isusu or daily savings has continued to be a phenomenon as a system of informal banking despite the equally significant increase in the formal banking transactions. In other words, the growth in the banking culture and awareness of modern banking services have not mitigated the impact of the daily savings/contributions as means of financial empowerment, especially at times of emergency to the small, medium and low income groups and businesses. Unlike the formal banking sector where, for instance, one would require rigorous documentation either to withdraw or deposit, the credit and thrift system offers quick service. A contributor can draw from his saving at the shortest notice anytime, once it is confirmed that the contribution card/passbook or identity is indeed that of the contributor. Today, it is common to see groups, cooperative or welfare, in offices contribute a certain percentage of their income to a pool where anyone in financial straits can fall back on especially in times of emergency without having to face the harsh bank conditions for obtaining a loan. Isusu has evolved and grown as a way out of financial challenges and an escape route from the official protocols of formal financial institutions.
“The practice began years ago in many rural communities where formal banking services were not available. It took different dimensions and approaches. In those days,” said Pa Lawrence Orji Igbe, “we had a group which met weekly, preferably early on Sunday morning, before those going to church. We had a chairman, secretary, financial secretary and treasurer. At the beginning of the year each member would indicate how much he/she would be contributing. At the end of the year we shared the money with interest.”
He explained how the interest was generated. “We charged interest on borrowed money, especially for non-members. The non-member must be introduced by a member as a surety. The amount to be lent would not be above the contributory capacity of the surety. On the alternative, the non-member could come with a household property or clothing material commensurate to the value of the amount he intends to borrow so that if he reneges on the repayment, he would forfeit the material.
“Part of the condition for the lending was that the material meant to indemnify the loan would be sold at the end of the financial year to recover the money. That way, there was no problem raising money either for the farm work, to pay the children school fees or even to build a house. Our own members could borrow without collateral but not beyond the total of their contribution at the end of the year.
“We used it to survive the hard times of the post-Civil War era. It was from there some of us raised money to start trading again after the Civil War policy that froze our monies in the bank. From there some of us were able to start life afresh. Others built their business empires/trades from that. Some built houses from that too.
“People became sceptical about going to the bank after the war experience. It took a long time to convince people to accept to keep money with the banks, especially for south easterners.”
The idea behind the weekly savings, he further explained, was to save the profits of the four-day cycle market days. Every market day, the locals had something to save, so the plat form provided opportunity to save for tomorrow.
In the township, it is done daily to meet the daily saving requirements of the informal sector. The attraction here is that the collector comes to the businessman right at the point of business and saves him the time of going to the bank and the embarrassment of going to the bank with so small amount of money, the signing protocol and verification and confirmation of signatures, which is an ordeal to those without formal education. Depending on the nature of business some save as low as N50 daily. There is no restriction as to minimum amount one can save or withdraw. One can withdraw all the savings in one fell swoop.
Pastor Kalu Okwara Kalu is the manager of a thrift company located in Umuahia.
According to him, through the daily savings many people have risen out of their financial challenges while others have gained financial independence by establishing thriving businesses, ranging from commercial transportation, retail stores and tools to workshops for artisans.
Kalu narrated his experience as an operator in the sector. “Isusu is an age-long financial institution that has been helping peasants to keep financial stability. It has helped many families to train their children. I met a commercial tricycle operator who was able to save and buy a brand new ‘keke’ (tricycle) at N700,000 from the ‘Isusu.”
Kalu also described the daily savings as the beginning of primary banking. “It can be used to meet big business challenges. The big importers and merchants in Aba use it. The big landlords, who have houses all over the city, use it.”
According to him, apart from the financial empowerment aspect, Isusu also generates employment.
“Graduates can come together and form a cooperative for the purpose of saving people’s money. The key word is trust. Once you build trust among your clients, you can live on the service.”
Kalu has over 500 clients. “What we do is to go to the people at the point of their business and collect their contributions which we record in a booklet. At the end of the year or anytime the client wants to terminate the service, we collect our service charge. Our charge could be one day contribution in the month,” he said.
The man said his patrons were among the petty traders, food vendors, commercial tricycle operators, auto mechanics, carpenters, and tailors, among others. According to him, the company has been sustained over the years by the virtue of honesty, integrity and trust built among the clients. The result is that the customers/contributors will be the ones calling on the phone if they delay in coming to collect their deposit. They have no problem paying the token they collect as service charge. Unlike in the rural setting, however, the urban daily saving scheme does not give credit facility.
“We don’t give loans here. There are other companies that do that. We cannot handle the risk associated with loans. If, for instance, you give someone’s money as loan and the beneficiary defaults on payment what do you do when the original owner comes to ask for his money because we pay on demand?” he asked.
According to him, the money he and his staff help people to save is considered insignificant but when kept for a period of time becomes reasonable. “For example, somebody drinks two bottles of beer a day at N400 or eats beef/Isi ewu, which adds little or no value to his health. If you save that daily, in one month of 31 days, you have N12,400,” he said.
Interestingly, banks are beginning to tap from the informal system of daily savings. They encourage people to save as little as N100 daily and their staff come to collect the money at the contributor’s point of business. Odinaka, an employee of one of the banks in Umuahia, said she was recently posted from Anambra State, where she was doing the same work for the bank.
Mrs. Chinwe Ugele is the daughter of a thrift collector. She relived how it was like growing up in a family that saw thrift collection as a family business.
She said: “My father was a thrift collector. It was a business we all helped to do. It got to a point where we stopped worrying about money. It is just like banking, but the traditional kind. If you indicate interest you want to be part of the thrift collection, the operator/collector usually gets a register of persons in the programme. Each person has a number with a passbook. If you are on a daily package and contributing, say N100, at the end of 30 days you have N3,000 and the collector has one day of whatever you contribute.”
Ugele added: “Many people, who are involved in thrift, have a particular project in mind. For instance, if a housewife wants to buy a fridge, she puts little amount every month and at the end of the year she is able to accomplish that. Likewise business people, they put the money into the business and in a jiffy, it flourishes.”
Mercy Okonkwo, a fashion designer in Umuahia, said she was able to buy three of her sewing machines from daily contribution.
She said: “I started with one, but I never failed to make my daily savings. The good thing about it is that they come here to collect the money, thereby saving me a lot of precious time that I would have wasted queuing up in the bank. Also, if I have to go to the bank with as little as N500 every day, it looks odd. So the best option is to save it with the thrift collector. Ordinarily, that’s what I would have used to eat snacks and soft drink and at the end of the month I get N15,000.”
Mike Onyena, a petty trader, said he owed his survival to daily savings. “When I started, I used a wheelbarrow, moving from one point to another. Now I have more than a wheelbarrow could carry. I have a family of three; it’s from this I take care of them. I have encouraged my wife who sales baby wears to join the daily contribution.”
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