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Esusu - Global Encyclopaedia of Informality



Esusu describes traditional forms of cooperation in African societies whereby groups of individuals contribute to informal savings and credit associations for their mutual benefit... A form of rotating credit association.
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same time this was accompanied by peer pressure and a desire or neces-
sity to create dependency relations in order to have people to relyupon.
Interestingly, this informal practice has survived and can be found
in present- day Albania, albeit in dierent forms and in spite of the fact
that commercial loans are available and interest rates on deposits have
increased. The modern version of the loteria still rests on cash- only con-
tributions (bank transfers are rarely, if ever, used) made by a group of
people into a common pool that is smaller than that used in socialist
times. One explanation for the smaller groups may be the desire to com-
pensate for the higher risk associated with the scheme, as participants no
longer always come from the same neighbourhood or workplace. They
might not know one another well and may be dependent on the loteria
organiser knowing and trusting them all individually.
The goal is no longer the purchase of household equipment, but
rather having an available sum of money that would allow an extraordi-
nary purchase. The money might be used for a variety of items ranging
from the purchase of a mobile phone or an ipad, to paying for a holiday.
Because salaries are now paid at dierent times, and participants may
come from dierent environments, they need to agree on a specific pay-
day and a draw day. They might also on occasions decide not to apply the
lottery scheme at all, but simply agree consensually on when each partic-
ipant will receive their money. Should they fail to agree, if, for instance,
too many people want the money in the same month, then they would
revert to drawing tickets and get back to the lottery- like method of allo-
cating the savings.
5.18 Esusu (Nigeria)
Evans Osabuohien and Oluyomi Ola- David
Covenant University, Nigeria
Esusu describes traditional forms of cooperation in African societies
whereby groups of individuals contribute to informal savings and credit
associations for their mutual benefit. These associations are found
mainly in agricultural production and credit financing and they substi-
tute for and complement modern cooperative institutions and formal
financial systems. The practice is believed to have originated among the
Yoruba people of Nigeria and to have spread from there to Liberia, the
Democratic Republic of Congo and most of the West African countries
(Seibel 2004). While known as esusu or esu among the Yorubas in south-
western Nigeria, the practice is called etoto by the Ibos in south- eastern
Nigeria; adashi by the Hausa people in northern Nigeria; dashi by the
5.18 eSuSu (NIGERIA)
Nupe people of Nigeria’s Kwara and Niger States; osusu by the people
of Ogoja in Cross River State; isusu by the Igbos from Abia, Anambra,
Ebonyi, Enugu and Imo States; asun by the Ishans of Edo State; etoto by
the Ibibios of Akwa Ibom State (Nigeria Real Estate Hub (NREH) 2014);
bam by the Tivs of Benué State (Seibel 2004); tortine in Cameroon and
Niger; and susu in Ghana (Iganiga and Asemota 2008). The term refers
to the funds collected, not to the contributors themselves (Bascom 1952;
see obshchak, 5.22 in this volume).
Outside Africa, esusu practices can be found in the Caribbean
Islands, where they presumably migrated at the time of the transatlantic
slave trade. Maynard (1996) documents the translocation of the Yoruba
esusu rotating- credit association in Anglophone Caribbean. In Jamaica,
the practice is called partner, while in other Caribbean Islands it is called
syndicate. Migrants were also instrumental in establishing contribution
societies in several American cities (Bascom1952).
Among the Yorubas, traditional cooperatives known as aaro, owe,
esusu and ajo are common. Aaro refers to a cooperative agricultural
arrangement in which peer farmers form ad hoc groups and work on
one another’s farms at peak periods on tasks such as land preparation,
planting, weeding and harvesting, until all the members of the group
have been serviced (see pomochi, 5.13 in this volume). Owe is another
form of agricultural cooperation whereby physically capable members of
the community (usually young or middle- aged men) unite to assist the
needy, elderly and chieftains on their farms.
Esusu and ajo describe means of informal financing, whereby indi-
viduals come together to further their individual and collective inter-
ests. This may take several forms. First, there are units that are aimed at
mobilising savings but that engage in little or no lending. Second, there
are lending units that engage in little savings mobilisation. Third, there
are groups that engage in self- help finance and involve various types of
savings, including rotating ones as well as those provided by licensed
cooperatives (Ojenike and Olowoniyi 2013). In the literature on infor-
mal finance, esusu is generally associated with rotating savings and credit
associations (Seibel2004).
Among the Yorubas, esusu cooperatives operate as follows: a group
of people team up to contribute a fixed and equal sum of money at specific
intervals – daily, weekly, fortnightly, monthly or bi- monthly – enabling
each member to collect the entire sum in rotation. When everyone in the
group has benefitted from the pool, a new rotation cycle is launched. The
order in which people get to draw the money is usually decided by means
of a ballot or by consensus.
In urban areas, the Yorubas distinguish between esusu and ajo. In
ajo, a professional collector, the alajo, goes round to collect contribu-
tions, usually on a daily or weekly basis, and is paid a small commis-
sion for this service. This is more personal than the formal financial
system, since no one needs to go to the bank to make a deposit. At
the same time, it is less personal than esusu associations, since ajo
contributors do not necessarily know the other contributors. Rather,
their relations are mediated by the alajo, who keeps a record of con-
tributions. Each contributor must make regular contributions within a
given period, but is at liberty to contribute according to their budget.
In certain circumstances, such as an emergency, a contributor may
ask the alajo to return a certain amount of their contribution; this is
what distinguishes ajo from esusu. In some cases, the alajo has a bank
account, in which he or she deposits the funds until the end of the
collection cycle, at which point the money must be paid to the chosen
contributor. The decision on how and when the contributor gets the
money from the alajo is mutually agreed between the two of them. For
instance, if the contributor contributes daily (which is popular among
traders and small business owners) and the contribution ‘matures’ at
the end of the month, the alajo will, after subtracting his or her fee,
return the rest of the contribution to the contributor.
It is left to the alajo’s discretion whether or not to use a bank account
for the collected funds. Many Nigerians are reluctant to subscribe to for-
mal financial services. In southern and northern Nigeria, for example,
street traders resort to informal means of credit and savings mobilisation
because they do not trust most formal microfinance institutions (Oloyede
2008). When an alajo chooses to use a bank account, however, this means
that informal finances enter the formal financial system, and creates a
link between the formal and the informal systems. This coexistence has
been recognised under the concept of financial dualism (Osabuohien and
Esusu operates outside the formal legal and financial systems
and tends to function solely on an oath of allegiance and mutual trust.
This ensures that members of the association who have collected their
funds early do not pull out of the system, causing other members to
lose some or all of their contributions. As for ajo, the credibility of
the alajo plays the key role in preventing risk and ensuring continued
Esusu remains popular despite the establishment of formal micro-
finance institutions in Nigeria. It is used by workers of the informal sector,
market places, rural and urban communities and religious groups. It is
5.19 mahalla (UZBEKISTAN)
particularly popular among low- and middle- income earners. Many rural
workers rely on it because they are poorly paid and therefore do not have
access to the formal financial system. Esusu, by contrast, tailors its financial
services to the real, day- to- day needs of each member of the group. With
esusu, saving is more convenient and credit is less costly than it would be
in the formal financial system (Oloyede 2008). There are also cost- related
incentives for joining an esusu group:it is interest free. Gender also plays
a role:Nigerian women are more likely to use esusu as an informal means
of saving than men (National Bureau of Statistics2013).
While esusu is largely an informal practice, it also penetrates formal
work settings and serves individuals and groups within business organi-
sations. Engaging in esusu is often seen as supplementary to other means
of obtaining credit (such as cooperatives). Many people engage in esusu
in order to pursue a specific objective such as purchasing assets, starting
a business or expanding their trade. Informal business operators often
resort to esusu since they find it hard to obtain loans frombanks.
Empirical studies of informal finance, financial exclusion, modern
cooperatives, poverty alleviation, micro- financing and savings mobili-
sation in Nigeria recognise the significance of esusu and its variants and
acknowledge its impact. Legal aspects and trust issues around the practices
of esusu are less straightforward. Nonetheless, esusu practices in Nigeria
and beyond are based on trust and on the integrity of the contributing
members (Hofstede 1980; Fukuyama 1996). Comparative research into
the origins and instruments of informal financing in a cross- country or a
cultural- type perspective may bring interesting, if unconventional, results.
5.19 Mahalla (Uzbekistan)
Rustamjon Urinboyev
Department of Sociology of Law, Lund University,Sweden
Derived from the Arabic mahali, meaning ‘local’, the term mahalla is
formally used in Uzbekistan to mean neighbourhood, local community,
or state administrative unit. There are today some 12,000 mahallas in
Uzbekistan, each of which consists of anything between 150 and 1,500
households (Micklewright and Marnie 2005:431). However, the word’s
rich cultural roots mean that mahalla has multiple meanings and defini-
tions. In Uzbekistan it is also used by local people to describe community-
based, informal economic practices (Sievers 2002; Urinboyev 2013). In
this sense, mahalla denotes the means whereby people obtain access to
public goods, services and social protection while bypassing the state. It is
therefore necessary to distinguish between the ‘administrative’ (formal)
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5.17 Loteria/Lloteria (Albania)
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5.18 Esusu (Nigeria)
Evans Osabuohien and Oluyomi Ola- David
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Full-text available
The informal economy is quite a controversial term and difficult to define precisely, but generally it summarizes in itself all unregistered aspects of economic and commercial activity in legal and fiscal system, that basically tent to avoid taxes and fees, the system of social security and health contributions, the mandatory norms of product safety, of their reliability as well as their business social responsibility. The loss that the state and society have suffered from the informal economy is large enough, this seen in different ways. Non-collection of taxes and contributions automatically led to an impoverishment of the state budget and lack of investment in public services. A social responsibility has continuously accompanied and threatened the government performance, and it is especially more vulnerable to the level of pensions and salaries, as well as in the quality of public services and investments. Actually, the debate on the informal economy, on the means and ways to "dominate" such economy, being unable to finally reduce it, is in a critical stage, even in developed countries. According to official statistics, the informal economy fluctuates in levels 5-20 % of GDP in different EU countries. Features of this “type" of economy is that it generally reaches the highest values in developing countries, where economic and social development, culture and respect for the rule of law , are low. The level of informal economy in Albania (actually, according to official statistics accounts for about 33 percent of GDP1) needs to be treated as a real threat to the economic stability of our country. Legal stability (recently there has been a frequent change of laws) is considered Important in reducing the informal economy. The fight against informality requires an integrated legislative package of measures aiming at the improvement, control and the rigorous implementation of the legislation requirements, the promotion of initiatives for a self- breakaway to from informal economy and creation of tangible opportunities to integrate liberated capital in priority development programs, in order not to repeat the negative phenomena that are still holding hostage the Albanian economy. DOI: 10.5901/mjss.2014.v5n9p642
The Nigerian’s financial system is dualized: The formal and the informal (unorganized) financial markets. In this regards, the paper investigates the various institutions, modus operandi and the extent of financial intermination in different social settings. Empirical results shows that traditional savings and credit associations (TRASCAs) are prevalent in semi-urban and rural areas among semi-skilled and unskilled workers and traders, while daily Saving Enterprises (DSEs) and Professional Money Lending Scheme (PMLs) strive in semi-urban and urban centers among artisans, traders and skilled workers. The performance analysis of these unorganized financial markets possibly reflects strong savings propensities and more robust lending activities. Given the failure of most government rural financial intermediation programmes, the paper therefore suggest that money market development policies should be tailored to suit the peculiarities (economic, social, etc.) of the target population, in order to foster the development of dependable rural financial market.
Few accounts exist of the nature of everyday rural life in communist societies, such as those which existed in Eastern Europe between the end of World War Two and circa 1990. In this paper we use oral-history testimonies from older people to reconstruct an ‘historical ethnography’ of rural life in Albania, the most isolated and repressive of the East European socialist regimes. We build our analysis around the dialectical relationship between the ‘shortage economy’, which was all-pervasive and derived from the Albanian regime's Stalinist policy of prioritising mining and heavy industry over consumer goods and agriculture, and the ‘second economy’ which developed as a bottom-up strategy to overcome some of the imbalances and blockages in the official or ‘first’ economy. Fieldwork was carried out in clusters of villages and settlements corresponding to cooperatives and a state farm in four locations in different parts of Albania. Within the symbiotic or ‘lubricating’ relationship between the shortage economy and the second economy, we examine the ‘institutionalised hierarchy of access’ that gave some people and groups privileged access to scarce goods, whilst others remained in a marginalised and partially excluded state. Free download (50 x until 16 April 2016)
Providing a wealth of empirical research on the everyday practise of Islam in post-Soviet Central Asia, this book gives a detailed account of how Islam is understood and practised among ordinary Muslims in the region, focusing in particular on Uzbekistan. It shows how individuals negotiate understandings of Islam as an important marker for identity, grounding for morality and as a tool for everyday problem-solving in the economically harsh, socially insecure and politically tense atmosphere of present-day Uzbekistan. Presenting a detailed case-study of the city of Bukhara that focuses upon the local forms of Sufism and saint veneration, the book shows how Islam facilitates the pursuit of more modest goals of agency and belonging, as opposed to the utopian illusions of fundamentalist Muslim doctrines.
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Using a panel of non-farm household businesses for Vietnam, this paper sheds light on the links between households' and entrepreneurs' social networks and household business performance. We address three related questions. One first question is whether we can find evidence of a differentiated effect of employment of members of the extended family versus hired workers on the business performance. Then we examine the extent, intensity and determinants of potential redistributive pressure exerted by the extended family, and borne by households running household businesses, notably under the form of inter-household transfers received and given. Finally, we identify the specific effects of redistributive pressure (from family and kinship ties, the social network capital, and the community) on the household businesses' technical efficiency. A cross-cutting issue is that all these analyses are performed separately for formal and informal businesses so as to ask whether social network support is more critical in the informal economy. We find evidence of a productivity differential between family and hired labour in the informal sector. In addition, the data do not support the hypothesis of substitutability between family and hired labour, which seems consistent with the idea that managerial and supervisory tasks may be mainly performed by family members. The results of transfer equations confirm the high propensity of households to transfer given their available resources and are consistent with the idea that family, kinship but also community level features exert an effect on the size and type of transfers to and from households. Finally, using information on the entrepreneurs' social capital and looking at firm efficiency, we confirm the importance of unlocking financial constraints and improving access to professional support for successful household entrepreneurship.