SuSu (also known as Sou Sou)- Savings is on everyone’s mind as the economic climate continues to be uncertain all over the world. A system that has been in existence for centuries in the developing world is rising in popularity. You may have heard it referred to as likelemba or a pardner. They have helped many a household get on its feet and achieve financial goals which seemed impossible. Here we will take an in-depth look at this informal financial system.
How Does A Susu Work?
It is a type of rotating savings and credit association. It allows you to save or borrow depending on when you need your money.
This Is How It works.
A susu is basically a group of people who decide to give up a predetermined sum of money and put into a pool. Even though a susu is informal, it is pretty organized. There is someone who runs the susu. This person is the banker. The organizer is usually the one who came up with the idea to start or the group might nominate the most responsible person.
The money is collected either every week or every month depending on the needs of the group. When the banker collects the contributions from each member the pooled amount is paid to the member whose turn has rolled around. This amount is called a “hand”.
The best way to understand the susu system is to discuss an example.
Let’s say you and 11 of your friends decide to start a monthly susu that is carded to begin in January.
The members will be given a chance to choose which month they would like to collect their lump sum. The first hand will be paid to the member who selected their payment in January. The member who selected the last hand would be paid in December.
The system can be a loan facility or a saving mechanism, it depends on how you choose to use it. If you choose a hand earlier in the year, your lump sum effectively becomes a loan that you will be paying back for the rest of the year. If you choose the last hand, then you have basically saved your contributions multiplied by 12.
If you are in a 12-month susu, and the contribution per month is £500. You would have saved £6,000.
Do You Receive Interest In A Susu System?
Sadly, with susus you get what you put in, nothing more nothing less. Interest is not part of the susu equation.
How often are susu hands paid?
Susu hands can be paid out annually, monthly, fortnightly, or weekly. It really depends on what your susu decides on.
What other names are susu known by?
The have been beneficial to people all over the world. There are several other names for a susu. The word “susu” originated in West Africa. It also called susu in some Caribbean islands. Here are a few that you may encounter depending on the part of the globe you are from:
Pardner or Panda- Jamaica
Likelemba- Africa (in general)
Tanda- Latin America/ Mexico
Committee or Quniela- Pakistan
Cuchabales- El Salvador and Guatemala
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Stokvel- South Africa
Who Usually Joins
A Susu (Sou Sou)?
Traditionally, low-income earners have used this system to improve their financial situations. They usually help members accomplish short-term financial goals. However, anyone can be a part of a susu. One of a susu’s unique features is that everyone one the group is affiliated in one way or another. They may friends, family, or friends of the family. The whole idea is to find people who you can trust to join a susu.
What do people generally use their susu hands for?
Your susu (sou sou) hand can be used in any way you want. However, here are some of the popular uses:
School/ university fees
All you need to know is your financial commitment deadline and choose the hand that corresponds.
Are There Any Rules?
As you already know a susu is an informal banking system. As such there are no written rules. However, there are certain conditions that should be adhered to for the susu to be a success:
- You should make payments on time so that the hand that is due can be paid in a timely fashion.
The banker will let you know what date you need to make your contribution by.
- You will be given an opportunity to choose which hand you would like, and you will be expected to stick to it.
- There is enough flexibility within the system to allow for an emergency. You can always swap spots with another member of the susu who is willing.
Does The Susu (Sou Sou) Banker Get Paid?
Bankers are traditionally not paid to run a susu. The banker who asked for a fee is generally not looked upon in a favorable light. This might even discourage people from joining the susu. However, it does occur on the exceedingly rare occasion.
What Are The Advantages Of This System?
A susu has several benefits for those who chose to join on:
-There are no fees attached to the susu system. All you have to do is make your contribution.
- You don’t need any formal documentation to join a susu. All you need is for a group member to vouch for you and you are pretty much on your way.
-The first hand t is an interest-free loan.
Are There Any Disadvantages That I Need To Be Aware Of?
There are some cons that you may have to consider if you plan to join a susu:
-There is always the chance that you may have some delinquent members who do not make their payments in a timely fashion. There have also been instances when people have lost their investment.
- Susus are not regulated by any government financial body.
- Your susu contribution is not insured.
-Susus do not earn any interest and your money will be at the mercy of inflation.
-You will not have any access to your money until you get your hand. If there are a lot of people in your susu, you might have quite a wait.
–Susus (sou sou) is the people’s banking system.
The simplicity of the method is one of its key assets. We endorse this type of saving technique and really think that it can work for anyone!