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Ghana: Susu collectors connect with formal banking; An ancient African banking system is helping to promote a new microfinance initiative in Ghana. Stephen Williams reports.

Susu collectors are known to have plied their trade in and around Ghanaian markets for at least three centuries. The concept is remarkably simple and provides a very useful service for small traders.

Typically, it works like this. Traders pay a small sum to register with a Susu collector, perhaps C20,000 (around US$2). The collector makes his daily rounds and collects a similar amount over a 31-day rolling period from each of his customers. At the end of the period, the collector pays out lump sums to the customers, while retaining one day's payment from each customer for his services. In larger collectives (say, an office group), selected members receive lump sums each month while the others wait for their turn, and the ball keeps rolling.


Susu collectors can also offer other services such as small loans and helping their customers to establish or develop their businesses. Now Barclays Bank of Ghana is connecting modern finance with this ancient form of banking.

"There are perhaps 4,000 Susu collectors in Ghana, each serving between 400 and 1,500 customers daily," explains Edward Derban, who heads the Barclays' Susu programme. "They offer basic banking to some of the least affluent in Ghana, such as the small trader at the market or the micro-entrepreneur selling from roadside stalls. We believe that there is a real opportunity for Barclays to learn from them so that we can know how best to help and complement their services."

For Barclays, the UK-based financial services group which, in terms of market capitalisation, is one of the largest global financial services companies, Africa is an important part of its international market. Barclays demonstrated its commitment to the continent when, on 27 July last year, it purchased a majority stake in one of South Africa's leading retail banks, ABSA. At over $5bn, that purchase represents the largest investment Barclays has ever made outside the UK.

The Susu collectors programme may not be in quite the same league, but Derban believes it is still hugely important. The underlying philosophy is that a truly financially inclusive society can only be achieved by supporting existing, indigenous financial institutions that already provide services such as loans and savings facilities to the least affluent. To do this effectively, the Barclays Micro-banking Project promises to offer a holistic approach: First, it is launching a new type of account, the "Dwetiri" (or investment capital) account. This has been designed for Susu collectors in collaboration with the Ghana Co-operative Susu Collectors Association (GCSCA). The account offers investment capital for on-lending and savings deposit accounts for GCSCA members.

The GCSCA will select 100 Susu collectors for the pilot--50 from Accra and 50 from Kumasi. They will undertake an initial screening of loan applicants before passing them on to the Barclays Microbanking Project.

Secondly, Barclays is offering "micro-banking capacity training"--a special capacity building programme for participating microfinance institutions. In this regard, it is working closely with the Ghana Microfinance Institutions Network (GHAMFIN).

Thirdly, Barclays is providing a financial awareness programme to help people gain confidence in basic financial skills in the effective management of their money. This is designed for clients of the participating microfinance institutions. The GCSCA will also contribute to the capacity building and financial awareness campaign.

Barclays has been involved in banking for over 300 years and operates in over 60 countries with more than 110,500 permanent employees. Though the individual Susu member's income is too small for "high street" banking, collectively it amounts to a [pounds sterling]75m economy thriving below the traditional banking radar.

"What we are doing is somewhat unique," says Margaret Mwanakatwe, MD of Barclays Bank of Ghana Limited. "Not only are we creating an account for Susu collectors to deposit their funds, we are also providing them with loans which they can 'lend-on' to their customers, helping them build their capital. In the process, we are laying the building blocks for a truly financially inclusive society. Currently, over three quarters of Ghanaian society may not have access to high street banking."

Mwanakatwe continues: "We are also providing capacity building training to Susu collectors to make sure that they do their credit risk correctly. Finally, we are using our expertise to educate the clients of the Susu collectors on basic financial issues. We are currently running a trial programme with 100 Susu collectors. If it is successful, we would look to roll the model out to other African countries."
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Title Annotation:Endtail
Author:Williams, Stephen
Publication:New African
Geographic Code:6GHAN
Date:Aug 1, 2006
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