berniesrevolution: IN THESE TIMES Nkem Khumbah immigrated to the United States from Cameroon in 1990
berniesrevolution:IN THESE TIMESNkem Khumbah immigrated to the United States from Cameroon in 1990. The seventh of eight children, he came for an education at the University of the District of Columbia. Determined to start building his savings, he worked odd jobs, often tutoring or working the front desk of an apartment building. In order to stick to a savings plan, he put $300 a month into his community’s njangi, and about a year later received over $3,000 to buy his first car. As more of his family came to the United States, the njangi grew to 30 participants. The family prospered, obtaining advanced degrees, buying property and starting businesses. Today, Khumbah is a lecturer at the University of Michigan-Ann Arbor.Brazilian Jacqueline Muniz, 44, had a similar experience when she first immigrated to the United States. Informal consorcios were an integral part of establishing herself, and her community, in Massachusetts. She didn’t know about or understand the U.S. banking system—how to open a checking account or even what that was—so she turned to a consorcio to save money, contributing $100 a week. Eventually, she received $5,000 from the consorcio to purchase her first car.Linda Silva Thompson is a born-and-raised U.S. citizen who worked in New York City with immigrants from all over the world. She participated in her workplace sousou, and with the money she collected, paid off her car loan and her children’s college tuition.Njangi, consorcio and sousou are all words used to describe a “rotating savings and credit association,” shortened to the acronym ROSCA in English. In Peru, it’s called a junta or pandero. In Egypt, gameya. There are more than 200 words used around the globe. Often people know it by their native word, so if you ask them if they participate in a ROSCA, the answer is an emphatic no. If you explain what a ROSCA is, you might get an enthusiastic yes. It’s the most popular financial system you’ve probably never heard of.Used for centuries in the non-Western world, a ROSCA works like this: A group of, say, 10 people (but it can be anywhere from a few to more than a hundred) decide they can each afford to save, say, $100 a month. So every month, the group collects $1,000. Each month, a different person in the group receives the full amount, until everyone has received it once. The circle is then complete and the group can decide if they want to renew, expand or shrink the circle, or change the amount contributed.The number of participants in a ROSCA and the amount and frequency of contributions vary. What remains the same is the equality: everyone puts in the same amount and everyone withdraws the same amount when it is their turn. Some ROSCAs are large, with individual contributions of $10,000 or even $50,000 a month, while some can be as small as $20 a week.The order of dispersals may be determined by a lottery or democratically, based on need. When Khumbah’s nephew Moses Mbeseha, 27, had an unexpected car breakdown, the circle allowed him to trade places with the next month’s recipient. He used the $6,000 he received to purchase a new car.The disbursement may happen at a monthly gathering, or one-on-one at a trusted community member’s home. In Khumbah’s njangi, the person who receives the money that month hosts a dinner at their house, a ritual that has created strong family bonds. Cousins grew up together, raised like siblings.Beyond the social and cultural importance, the ROSCA functions as a bank of sorts: If you receive your money at the beginning of the circle’s cycle, the ROSCA fund is tantamount to an interest-free loan. If you receive the money at the end of the cycle, it’s a savings mechanism.ROSCAs also offer a social support around savings. “As our banking system has become automated, where it’s just so easy to have full access to all of our cash 24/7, a lot of people find it difficult to save,” explains Linda Silva Thompson, who became a scholar of workplace ROSCAs, authoring a groundbreaking study on the practice: “Moving from Rags–to–Riches: Together or Alone? Underground Cooperative Savings—An Ethnography of Workplace Rotating Savings & Credit Associations (ROSCAs).” With ROSCAs, Thompson says, people’s “savings are out of their reach,” and available when needed.It is not a formalized system. There are no laws, regulations or written documents that govern it. There is no interest, and there are no penalties or fees. There are no police involved if someone doesn’t fulfill their responsibility. The strength of the ROSCA is found in community.(Continue Reading) -- source link
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