Susu (informal loan club)
A susu or sou-sou (also known as a merry-go-round) is a form of rotating savings and credit association, a type of informal savings club arrangement between a small group of people who take turns by "throwing hand" as the partners call it. The name is used in Africa (especially West Africa) and the Caribbean. The basic principle is that each member of the group makes a standard contribution to a common fund once per time period. Then each period the total contributions are disbursed to a single member of the group. The recipient changes each period in a rotating fashion such that all the members of the group are eventually recipients.
A member who receives a distribution early on effectively receives a loan. They collect a larger sum of money early and "repay" as they make contributions going forward. A member who receives a distribution toward the end of a rotation has effectively been "saving" their contributions leading up to the disbursal.
Traditionally the arrangement is conducted in cash and without any interest charged. The organizer of the sou-sou may be compensated for their efforts as a courtesy. Since a sou-sou is not a written or legal contract it relies on personal trust to discourage malfeasance. For this reason it is more likely that the participants are members of the same community and know each other.
Around the world
The concept of a susu is used throughout the world and has over 200 different names that vary from country to country. The funds are generally gathered with a set amount contributed from family or friends each week. An estimated three quarters of Caribbean immigrants in New York participated in susus during the 1980s.
The savings clubs are mainly used in other countries as an alternative means of accessing capital when traditional lending is not readily available. As cultures migrated to the United States, they brought the savings tradition with them. Not surprisingly, the "underbanked" will turn to the model to escape the same lack of access to capital.
- Susu account
- Tanda, the Latin American version of the system
- Rotating savings and credit association
- How To Buy A Goat When You're Really Poor? Join A "Merry-Go-Round"
- Abramsky, Sasha (October 22, 2000). "Newcomers Savings and Loan". New York Times. p. CY4. Retrieved September 9, 2018.
- "Jamaican Emigres Bring Thrift Clubs to New York". New York Times. June 19, 1988. p. 34. Retrieved September 9, 2018.