Banking and saving are arrangements and institutions which have always existed with human beings. As time changed, these practices and institutions also evolved, adapting to the prevailing realities. Banking, saving and trading were efficient in precolonial Africa. Reading about the early days of banking reveals that efficient informal saving systems existed in Africa. Throwing those practices overboard, dishonesty and greed account for the quagmire bedeviling banking in today’s Africa.
Safe saving clubs in Africa.
This practice of savings clubs is indigenous to the continent and contributed immensely to the flourishing of saving and trading. In traditional Africa, women are associated with sound and reliable home management. Although the general impression is that households are run by men, there is no doubt that the core of the survival of the family lies in the hands of women, be it in matrilineal or patrilineal societies. Aside from those industrious creativity skills of the average African woman, the art of petty trading is also their preserve. They resiliently travel to remote villages to trade on market day. In Mpumalanga in eastern South Africa, this ingenuity of women and the saving system has impressed many researchers and observers. Women created a savings club among themselves as a means to build reserves for their families; it was a woman’s job to care for the children and the household. Those savings clubs clearly served as forums for reciprocal support and the clubs also provided the means for aspiration, commercial enterprise and individual economic success. The money stored up from the savings club isn’t just for groceries or paying the bills. The money saved could be invested in other sectors to continue increasing the family’s overall wealth. This practice is very fruitful and still prevails in that part of South Africa. This shows how Africa-founded financial practices are fully geared towards assuring good living, fighting financial loss, financial extortion and poverty in communities.
The su su practice
Also known as sou sou, susu or, esesu, this tradition originated in West Africa and quickly gained popularity in other parts of the world where Blacks live. Su su is typically done among family members and close friends, and this “group” decides on how much and how often they will contribute, and week after week one person in the group receives their “hand,” which refers to the group’s total contribution. Both men and women have their su su groups or “fan clubs”. This financial habit is ideal for people who struggle with saving money, want to pay down debt and have trouble getting a conventional loan. In Francophone West African countries, women are the members in most cases, and they call it les tontines. Some analysts go to the extent of comparing it to a Black Wall Street.
Paradigm shift: the debacle of banks in the name of modernity
During the colonial era, monetary transactions were done principally for taxation purposes. The few expatriate banks that developed catered for the needs of expatriate merchants and failed to advance loans to locals and entrepreneurs on the pretext that they lacked collateral. Following independence, most governments established national and development banks which were funded by the state. Unfortunately, some of those banks did not meet high prudential standards.
The case of Ghana
In 1953, the Bank of the Gold Coast was set up and became the Bank of Ghana when the nation became independent. The Bank of Ghana quickly developed by opening branches in most of the
towns and regions such as the Ashanti and the Northern Regions. The Banking Law was enacted in 1989, enabling suitable locally incorporated bodies to file applications for licences to operate as banking institutions. Subsequently, several corporate entities were licenced to operate as banks, including Meridien (BIAO) Trust Bank, CAL Merchant Bank, Allied and Metropolitan and ECOBANK.
Then came the Microfinance institutions whose clients are low-income individuals. Since it includes loans, savings, insurance, transfer services and other financial products and services, microfinance is originally one of the critical dimensions of the broad range of financial tools for the poor. Today, both banks and microfinance companies are ailing in Ghana. Several banks collapsed, while the su su and Mpumalanga clubs of traditional Africa are still flourishing. The Western model of banking is not working in Africa and Ghana is a brilliant example.
The following banks have collapsed: Capital bank, Beige Capital Bank, and in order to survive, Consolidated Bank (Ghana) and UNIC Bank were forced to merge. Greed and selfishness are the undeniable reasons behind this failure. The first bank collapsed because the CEO gave himself huge loans without interest. The second one closed down because funds were being mishandled. Bad debt is also a key factor; loans are given to clients who cannot pay back, either because of affinity or one of the following: favoritism, financial illiteracy no client financial standing check.
Credit unions and microfinance companies fail because they are founded by individuals who take loans from banks, hand management over to other persons, work first to earn the trust of clients and then bolt away with the loan from the bank and the clients’ saving, causing considerable loss to those two parties. The su su system, which was originally so sincere and well-intentioned, is now marred by people who pose as “su su collectors” and pretend to help market women save money. That group is targeted because most of them cannot read or write. A case which is frequently mentioned is that of a man who collected an enormous amount of money from market traders and ran away, to resurface after some years as a pastor. He chose to preach forgiveness at a spot where the market women could see him. Tomatoes and all types of vegetables were thrown at the criminal and to crown it all, he was bathed with water used to wash fish. Another pathetic case is a group of law enforcement officers who lend money at an interest rate of 20 per cent. Many desperate citizens go to them for loans and fail to pay off the debt because of the high interest rate. Ultimately, the borrowers are forced to run into hiding when the officers cum money lenders are spotted. Those officers easily dish out loans to people and, in return, intimidate them with threats of imprisonment when payment is delayed. Coincidentally, the leader of this group is also known to be a church deacon.
Hope comes from the actions of the Bank of Ghana that came to the rescue of certain banks that were in difficulties, and other important steps in that sanitization effort aim at regaining citizens’ trust. The rebranding of Barclays Bank as Absa, which is South African and does not carry any remnant or trait of slave trade falls, within such policies. Those incidents that engulfed the banks in Ghana certainly contribute to the almost unbearable cost of living.
Moussa Traoré is Associate Professor at the Department of English of the University of Cape Coast, Ghana.