The Comparative Study of Rotating Credit Associations

THE TERM 'rotating credit association', as used by Geertz (i 962), seems to be the most apt so far devised for institutions which have previously been called esusu or contribution clubs, or have been included in the wider groups of thrift, loan, and benevolent associations. A satisfactory definition is still lacking. For example, Geertz writes: 'The basic principle upon which the rotating credit association is founded is everywhere the same: a lump sum fund composed of fixed contributions from each member of the association is distributed, at fixed intervals and as a whole, to each member in turn' (Geertz I 962, P. 243). This description is too restrictive, and does not allow the inclusion of all the examples quoted by Geertz himself. Contributions are not, in fact, always fixed (see, for example, the case from Keta, Ghana, in Little I957, PP. 579-96), and the whole of the lump sum is not always received by a member (see, for instance, Ardener, S. I953). Further, the use of the term 'sum' is not satisfactory, as it may seem to imply that contributions can be made only in cash and not (in part or in whole) in kind, as with some Japanese or Chinese associations (Embree I946, p. I4I, among others). The wide variety of structure found, not only in different communities, but sometimes within one single community, makes it necessary to pare to essentials any definition which is to be comprehensive, in order to isolate the common elements. I would suggest the simple one: An association formed upon a core of participants who agree to make regular contributions to afund which is given, in whole or in part, to each contributor in rotation. This embodies 'the essential principle or rotating access to a continually reconstituted capital fund' mentioned by Geertz (i 962, P. 243), but includes also the notion of regularity. The two elements of rotation and regularity are, I think, the essential criteria, if we are usefully to distinguish these associations from the whole range of mutual benefit clubs and co-operative undertakings. Associations in which all contributions are held by an official or 'banked' and are not distributed on a rotary principle are, by this definition, excluded.2 A simple type of rotating credit association would be of this kind: Ten men meet every month and contribute one shilling each to a fund which is straightway handed over to one of their number. The following month another member receives the fund, and so it continues, members receiving in rotation, until at the end of ten months, each member will have put in ten shillings and received ten shillings. This appears at first sight, perhaps, to be an equitable mechanism for saving. It will be seen on closer examination, however, that the first member to receive the fund becomes a debtor to all the other members and remains one until the last contribution has been made; the last member to receive it becomes a creditor to all the other members throughout; while the other eight members move in turn from being creditors to debtors. As has often been recognized, therefore, the advantages to all members are not equal. Some of the most important differences between associations are in the ways in which the advantages and