usu is an informal deposits collection scheme that is common amongst
Ghanaians. Literature has it that Susu was introduced to Ghana from
Nigeria and was first practiced in Ghana around 1965 by a Roman
Catholic priest in the Northern Region of Ghana.
Susu as an indigenous deposit mobilizing scheme has contributed to
instilling the act of thrift amongst many actors in the informal
sector. This mode of deposit mobilization has thrived in places where
most formal banks dare to go. The individuals involved in the
collection of Susu are often referred to as Susu collectors. Although
the scheme was formally more identifiable with people living in the
rural areas, today the Susu scheme is very much popular and can be
found almost everywhere in Ghana even within the major cities where
there are a number of several traditional banks and other financial
institutions.
The Susu collector’s role within the context of financial
development in Ghana cannot be overlooked. The Susu concept has existed
before the establishment of most of the pro poor financial
institutions. For instance the rural banking concept in Ghana started
around 1976,11 years after the first Susu scheme was practiced. Susu
collection is as well older than any form of the microfinance
institutions we have in present day Ghana. However they have been one
of the few pro poor financial schemes that is still going through
re-tooling to turn it into a very effective indigenous poverty
alleviation tool to help in the fight against poverty.
With the expansion of the money economy, these informal financial
institutions (IFIs) have not lost their vigor. Quite to the contrary,
they have multiplied, both in numbers and diversity (Barclays 2005).
The Susu system seems to have proven to be a dependable and cost
effective mechanism of emphasizing state participation and
encouragement of the domestic indigenous sector.
The Ghanaian banking sector has seen tremendous growth in terms of
the number and type of the financial institutions available to assist
towards deepening financial access. By the end of 2011 there were a
total of 25 universal banks, 19 Savings and loans companies, 131 rural
and community banks and a number of microfinance companies including
Credit Unions all across the length and breadth of Ghana. Inspite of
this, a recent report by the World Bank indicates that only 30% of
Ghanaians have bank accounts. This finding therefore gives the clue
that the number of bank branches in Ghana has not translated to
increasing outreach, a condition that may be attributed to several
reasons including the delivery mechanisms of the traditional banks
something that the traditional Susu collectors have as the reason
behind their successful existence over all these years
How susu operates
Susu can be described as one of the most ancient traditional banking
systems found in Africa. It has been used over the years as a medium
for fund mobilization and ensuring the safety of the deposits of savers
within the informal sector. Susu has remained an informal financial
instrument use for the daily deposit mobilizations or collections by
people known as Susu collectors. The Susu collector operates by
visiting clients and potential clients to collect their savings on
daily basis for investment and safe keeping. Most clients in history
only used the Susu for building assets through savings and not for the
purpose of securing loans. In recent times, however, some susu
operators provide loans to their clients in order to ensure client
loyalty in the phase of competitions and also to meet the changing
needs of the Susu clients.
In order to keep accurate records each customer or client of the
Susu collector is given a card for the recording of the daily savings
made by each client. The Susu collector on the other hand also keeps a
contra card that has the name and picture of the said client. The
collector at all times ensures that both cards contain the same
transactions and are used by each party to solve any discrepancy that
may arise during the period of the contract.
Most Susu schemes are operated on monthly basis with savings cycle
pegged to a month after which a client can withdrawal his or her total
savings and take the decision to continue or discontinue with the Susu
collector. Clients in most cases agree to take their deposits after the
end of a cycle which is mostly one month and also made up of 30 days.
In order to make the transaction simple for both parties, client are
required to do their daily payment in equal amounts. The operator
of the Susu scheme charges a day amount saved out of the total number
of days saved as his operating charges. The interesting thing is that
the traditional Susu products mostly do not pay any interest on the
clients’ savings.
Importance of the Susu Collector
In Ghana, the history of the growth and contribution of the
microfinance sector cannot be written without making reference to the
role and contribution of Susu. The Susu schemes are the nucleus of the
present day microfinance industry in Ghana. They provide means by
which individuals without formal financial services can be assured of
the safety of their funds. Currently there are 1,462 Susu collectors
registered with the Ghana Co-operative Susu Collector Association
(GCSCA) and have still indentified over 4,000 Susu collectors who are
yet not registered with the Association.
For a lot more people, it is quite difficult to understand what
motivates people to hand over their savings to other individuals who do
not pay them any interest on their savings but rather take a fee for
keeping their monies. This phenomenon is directly the opposite of what
happens in the formal financial sector where financial institutions pay
interest on depositors’ savings. Many innovative financial observers
are yet to understand why the Susu scheme have rather registered
growth to the extent that many of the MFIs today have adopted Susu as
a deposit moblising product to reach their clients. In recent times
some insurance companies have also modeled premium payment by their
clients within the informal sector around the Susu scheme to reach
their clients. The Barclay’s Bank Ghana and Susu collector’s
partnership in 2008 is also an additional recognition for the informal
practice that has existed and contributed to deepening the financial
frontiers for most low income earners.
What made Susu worked
There should be something that has sustained the scheme even in the
era of financial sector growth in addition to the increasing complexity
of the informal clients. Trusting the Susu collector is one of the
main ingredients that have sustained the activities of Susu collectors.
Susu clients tend to trust the Susu collectors to safely keep their
deposits. Although the aspect of trust has been challenged by some
recent activities where some collectors sometimes abscond with client’s
deposits, it has not entirely affected the number of clients who are
using the services of the Susu providers.
The nature of the economic activities of most of the Susu clients is
such that they are the only key person managing their enterprises. In
view of that, they mostly do not have the leisure of making time to go
to the bank to transact any financial business. Most informal clients
have a need for convenient banking and the Susu collectors have the
their product tailored to solve the needs of these clients. Client of
Susu schemes have the laxity of having to undertake the withdrawal of
their savings from their work location by the Susu collector sending
their amounts to the clients during the collector’s daily rounds. The
truth is that this kind of service in the formal financial sector is
something most traditional banks will only do for their prestige
customers.
For the informal clients, the understanding and acceptance they
receive from the Susu collector is what keeps them glued to the Susu
scheme. The clients remain loyal because they feel accepted by the Susu
provider. The Susu collector in most cases lives in the same
communities with their clients and, therefore, tends to understand the
value systems of their clients and this include the cultural mannerisms
of the clients. The appearance, workout fit and the medium of
expression of the Susu collector also makes it comfortable for the
clients in dealing with the Susu collector. Literature reviews have
proven that the way and manner bank officers dress and even decorate
their plush offices somehow can scare most informal clients to
cultivating relationship with the traditional banks.
Microfinance clients or informal clients have low or no literacy
skills making it difficult to understand or read or fill the account
opening or loan forms provided by most traditional banks. The
transaction between the Susu collector and his clients are so simple
that even without referring to their deposits cards most customers can
establish their savings balance with the Susu collector because of the
fact that savings are done in equal amount and on daily basis.
Additionally, the transaction between them is mostly without much paper
works. In most cases the only binding document is the card or savings
booklets held by each party to serve as source of verification in the
event of any doubt.
Successful Susu collectors have been seen to demonstrate
friendliness towards their clients and even potential clients. The Susu
scheme has demonstrated very excellent client relationship and has
generated into client loyalty the reason why the Susu schemes have
remained stronger even in the era of financial sector boost in Ghana.
Conclusion
With the formalization of microfinance sector in Ghana , the
principle that have preserved an indigenous act of “savings’(SUSU) can
be modeled by microfinance institutions seeking to improve outreach
,impact and sustainability of their operations. The Susu scheme has the
client at the center of their operations and their operations are
highly determined by the needs and demands of the Susu clients. If
financial services meant for the low income are to effectively reached
them for the purpose of improving their livelihoods, there will be the
need for such financial institutions (whether downscaling bank or a
microfinance institution) to create mechanisms to suit the lifestyles
of the core clients rather than the institutions trying to get their
clients to adopt to their systems. This is what the Susu scheme in
Ghana have done so well.
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