Indigenous savings and credit societies in the Third World. A message
Bouman, F.J.A.
Savings and Development 1(4): 181-219
1977
Document Number: 532333
Over the past 20 years rotating savings and credit associations have become increasingly common in less developed countries. Their popularity stems from the advantages they have over official institutions: accessibility, flexibility, adaptability and their multifunctional character. Evidence suggests that the rural populations' capacity to save has been underestimated. ROSCA funds are not used primarily for agricultural investment but it is pointed out that this is because there in insufficient rural structure for farmers to feel it worthwhile to invest in their farms. Governments, bankers and students of development still have reservations about traditional savings and credit systems, but it is felt by many people that integrating them with the modern financial sector could be beneficial to both sides. For the bank, a ROSCA mobilizes savings, attracts a different clientele category, and commissions and fees for running a ROSCA can be large; participants, on the other hand, will have the benefit of the organizational expertise, efficiency and financial reserves of the bank.