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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 relyupon.
Interestingly, this informal practice has survived and can be found
in present- day Albania, albeit in dierent 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 dierent times, and participants may
come from dierent 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 (Bascom1952).
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
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 Statistics2013).
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 frombanks.
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)
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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