How contributory saving schemes grow business in Nigeria

How contributory saving schemes grow business in Nigeria

It is common to see small contributory savings schemes everywhere in Nigeria, where businessmen and women contribute portions of their profit to a collective purse.

Contributory Savings Scheme (CSS) is a special kind of deposit scheme where the depositor will earn a cumulative amount on maturity based on the monthly instalment of his/her convenience.

Saving schemes have different names depending on the geographical location of operation. The Yourba calls it Ajo, while it is referred to as Adashe in the north, and the Igbos call it Esusu.

Generic Piggy Bank / Kolo ( Saving Box ) | Jumia Nigeria

These contributions serve as a source for borrowing in emergencies, a way to grow savings and a means to achieve a collective goal,

At the heart of every contributor is the clan nature of its members.

Nigerians who spoke to our correspondent stated that the contribution in whatever name has helped to grow businesses as well as augment incomes.

With economic challenges of inaccessibility to funds by small business owners and inadequate income of civil servants, “Ajo” was born.

The practice has gone on for centuries and has become a backup for many small business owners, communities and civil servants.

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Mrs Tunrayo Lanre, a store owner in Gwagwalada, said that she had gained a lot from the contribution she had made over the years.

Lanre stated that she restocks her shop once it was her turn to take the money and it had helped her family.

“I am into a monthly contribution of 10,000 and we are just five, every month, one of us goes with 50,000 but the sum of 500 will be deducted for the up keep of the group, leaving you with 49,500.

“We came together by ourselves and appointed a leader among us, she will be the first to collect before any of us,” she said.

According to her, other groups may decide to pick number and the collect according to the number they pick.

She said that the major challenge she faced was that she had to make sales and make her own contribution before the end of the month, so that she would not disappoint the group.

Also, Mrs Monsurat Lawan, who sells Akara said she had achieved a lot with the contributions,

According to her, I contribute daily, weekly and monthly,  and I sometimes use the money from my weekly contribution for the monthly contribution.

“For daily contribution I pay 300 and pay 2000 weekly, so when it is my turn, I channel the money into my business,” she said.

She stated that from the contribution she has been able to pay her children’s school fees and meet the basic needs of her family.

Mrs Nkechi Okonkwo, who owns a mini restaurant, and also into corn business, said that she belonged to three different meetings and she had cards for her contribution.

“I have cards and I contribute every month when we go for our meetings.

“Our contribution lasts for a year and by the end of the year, you will be given the amount you were able to save up,” she said.

According to her, the meetings do not have specific amount that you are expected to contribute, you contribute what you have.

Similarly, Mr Success Agada, a businessman,  said that he started his business from the contributions he made during his service year.

“During my National Youth Service year, I joined a monthly contribution of 20,000 monthly and I was able to save up to 200,000 for 10 months.

“With the money I was able to start up a finance institution,  where I loan money to people.

“I am also in a meeting, we meet every month and we have a certain amount we contribute as monthly contribution,” he said.

Mr Grey Mmaduakolam, a civil servant, said he has benefitted and gained a lot of incentives from the cooperative society at his work place.

According to him, I have achieved things , which if it was just based on my salary I will not have gained  them.

“I was able to build a house because of the cooperative I am in.

“I was able to access loan on 10 per cent interest rate, which is not accessible in banks and there was no issue of collateral.

“We have the leverage of 30 months to pay back the loan, which is better than that of banks.

“In banks, you sign that you will pay every month but most times there might be delay in payment of salary and bank will surcharge you but it is not so with the cooperative.

“I do not think there is a staff in my place of work that is not a member of the cooperative.

“If you are able to offset the outstanding loan before the period of payment, you apply for another,” he said.

Speaking with an Ajo collector, Marvellous Divine Success Group in Gwagwalada, Mr Marvellous Silas, said that he started the business after he resigned from his job because he needed time for his academics.

“I was running a Sandwich programme at the University of Abuja Mini Campus , Gwagwalada , and I needed time for my studies,  so I decided to start-up something less time demanding.

“I do my business from Monday to Friday and I go to school during the weekend and this business has been on for five years now without any bad record.

“I am also a photographer,  and with this business I have time to cover events as well,” he said.

Silas stated that what has kept his business going was that he did not lend or loan out the money contributed by his members.

He stated that initially when he started the business he tried being  generous by lending money to people on the basis that they would pay later, adding that it almost cost him his business and trust of many.

“Whatever you put that you will get and you have access to your money at any point in time, it is the same system with the bank,” he said.

He stated that as the collector , he only has access to one per cent of the contribution of his members.

“Out of the 31 or 30 days of a month, the first deposit belongs to the company and the remaining 30 days contribution belongs to the contributor.

He stated that the major challenge he had  faced was lack of trust.

“Due to the rising incidence of collectors running off with people’s money, I had to deal with people doubting if I was ‘legit’ or not,” he said.


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