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By Joy Ehonwa. No one really knows how long the ROSCA has been around; my guess is, centuries. Known as Ajo or Esusu in these parts, the Rotating Savings and Credit Association has for a long time been employed as a tool which serves two main purposes for its members; savings and credit. How Does It Work? A ROSCA is a group of people who come together to contribute a fixed amount to a common purse regularly with one member taking the whole sum once at each contribution. The individuals in the ROSCA select each other, ensuring that participation is based on trust and social forces and a genuine commitment to participate. Requiring as few as 5 members to start, these groups exist in every imaginable place, from small market places to big multinational companies. They are created and operated across states and even countries! 12 members who contribute N100, 000 every month pool N1.2 million monthly. For the one who collects earlier, that’s a N1.2million loan without interest! And for the one who collects later, that’s N1.2 million saved! Cultivating a Saving Habit Saving comes easy to some, and those lucky ones may not see the value of a ROSCA, but for the majority who find it hard to save regularly and consistently, Ajo is a lifesaver. “I’m not really disciplined when it comes to saving money, but with ajo my integrity is at stake and so I cannot afford to default. It’s a really good feeling at the end of each year to know that I have good savings in the bank.”- Awero “There will always be things that need to be done with money, especially for those of us with dependants. If not for my esusu I wouldn’t be able to save a dime.”- Emeka If you’re genuinely interested in saving, joining a ROSCA and arranging to pick up last is an excellent way to discipline yourself in this regard. The risk though, is that your money isn’t being saved in a secure location such as a bank. Instead, your funds lie in the hands of your association members. Raising Funds Esusu is also a stress-free way to gain access to credit. Take, for instance, the person who can save a certain amount in six months, but needs that amount now and doesn’t have it. Such a person can join a ROSCA, collect early, and then refund the “loan” by continuing his contributions. This way, each member is able to access a larger sum of money during the life of the ROSCA, and use it for whatever purpose she or he wishes. “I needed to rent an apartment of my own but I didn’t have enough money at the time I found the flat of my dreams. Luckily for me a colleague asked if I would be interested in joining a contribution he and some others were planning to start. I immediately indicated my interest in collecting first, and everyone agreed. I got my rent money at the end of the month and paid back over the following months. I would have lost the flat! – TJ The benefits are many, but ROSCAs are not risk-free. Here are a few ways to make sure you don’t get your fingers burnt; 1. Make sure the members are credible and have secure jobs. 2. Ensure that you have a steady source of income yourself 3. A list of all members, complete with names, phone numbers, email addresses, account details and months of collection, should be drawn up and sent to everyone. 4. Make certain that each member has some form of collateral. A good idea is to have post-dated cheques made out each month, in the name of the member collecting. Bounced cheques have serious implications, and no person of integrity wants to be involved in that. You work hard for the money; manage it wisely.    

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This article was first published on 19th December 2012 and updated on August 13th, 2015 at 4:44 pm


Joy Ehonwa is an editor and a writer who is passionate about relationships and personal development. She runs Pinpoint Creatives, a proofreading, editing, transcription and ghostwriting service. Email: pinpointcreatives [at]

Comments (4)

4 thoughts on “HOW TO: Use The ROSCA To Boost Personal Finance!”

  • …are they still as popular to use?

    • Cee

      They still are. Before I started working at my current job, I had no idea they were still in existence. A colleague extended an invitation to me and I haven’t regretted taking her on.

  • Hey Joy, thanks for this piece! I found this interesting as I am currently working to help adolescent girls save up through ROSCA.

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