Ghana holds potential for credit expansion.

Author:Steel, William

Individual "mobile bankers" help traders and others to accumulate savings through small daily deposits. As institutions emerge that link these savings collectors to the formal financial system or adopt their methods, intermediation between small informal savers and borrowers is expected to increase

A market woman in Ghana typically sees her "banker" every day to deposit as little as 25 cents. At the end of the month, she gets back her accumulated savings, with which she replenishes her stock or buys something that she could not afford out of one day's profits.

She often requests an advance on the month's expected proceeds, but her banker may avoid lending because he lacks cash reserves or access to credit in case repayment is delayed.

Susu collectors

This banker is an informal savings collector, known in Ghana as a susu collector. In Accra, over 500 of them have formed the Greater Accra Susu Collectors' Co-operative Society (GASCCS). They play an important role in mobilising savings in West Africa through their daily collection of deposits.

They differ from community banks and group-based organisations, such as Bangladesh's Grameen Bank, in that they are individual entrepreneurs who perform a financial service without any capital of their own. Evidence from surveys of three marketplaces in Ghana suggests that they could intermediate more fully - use the funds they obtain from savers to lend to borrowers - if they had access to temporary liquidity.

Savings collectors contract with clients to collect a fixed amount daily (or at regular intervals), typically ranging from $0.25 to $2.50. In Ghana, this amount averages $0.73 a day for each client. At the end of each month, the savings are returned to the depositors; the collectors keep one day's deposit, or 3.3% of the monthly savings, as commission.

Why, then, do people pay to save?

* First, the susu system functions as a financial-management service. Depositors commonly use the accumulated funds as working capital to restock the supplies that enable them to earn a stream of profits.

* Second, by pledging to set aside savings for their susu collector, market women can protect their savings from the incessant appeals of family and friends.

* Third, in countries where commercial banks are ill-equipped to accept small deposits by often illiterate savers, depositors willingly pay for the convenience of banking at their workplace daily.

Collectors put the bulk of their daily receipts into commercial...

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