Formalizing an Informal Institution

Susu banking is not new. It is a well-established, long-running financial solution to the age-old problem of access to credit, which is widely experienced by merchants in the informal sector, petty traders, and small-scale businesses throughout West Africa. “Susu” in Ghana is known as “esusu” or “ajo” among the Yoruba in Nigeria, “yesyes” or “jojuma” in Togo, and “nago” in Côte d’Ivoire. This system of microcredit supports traditional methods of small-scale savings and loans operations and encompasses the traditional daily deposit collection common to West-African markets.

Located in a large market in Accra, Open Heart offers high-street banking services to its clients: a petty trader approaches the window of the tiny office to make change for a five-cedi note; a woman who sells water sachets comes for an advance in collecting her payment; two young boys, each with a handful of coins come to deliver their family’s daily “contribution”.

One of the projects I am working on is computerizing the banking records of the 7,000 clients served by the Open Heart Solutions Agency. We are creating a client database to facilitate access to client information, such as credit history, savings balance, and loan repayment.

The current records and accounting systems are precise and the lines of responsibility are well defined, but with a rapid rate of growth, the agency needs to modernize. Many clients are identified by a nickname, their first name (which is commonly the name for the day of the week on which they were born), or a combination of their first name and the item they sell. (“Kwame Shoes” is one of my favorites!) While each of the twenty susu agents knows her own clients and sees them nearly-every day, it is increasingly difficult to keep track of them (one agent has nearly 500 clients), using only client contribution cards.

To address this the executive director of the agency asked that we obtain official information from each client so that the records are more formal and more complete. With consultation from the susu agent supervisor, I created client profile form for each susu agent to use to collect personal information on her clients—legal name, nicknames, home address, business or trade location, DOB, and then client account number and card number (which are the two indicators currently used to identify client accounts).

The following day I met with the agent supervisor and several susu agents to see where we stood and to estimate the amount of time this project would take. The susu agents returned with no information, explaining that their clients were apprehensive to give out personal information, that even though they interact with their agent a few times a day, they didn’t want to have an account in their legal name and they didn’t want their agent writing any unnecessary information about them. The agents did their best to explain to the clients why they were collecting this information, but in the end, they had to explain to me that their clients still didn’t understand why the agency wanted the information, and were, in a sense, afraid to formalize their financial practices.

Hesitation to disclose personal information is a cultural difference and it was maybe an obvious response, considering that those who use susu prefer informal banking institutions. The effort to modernize the susu records and accounting will have to stay in the office, leaving susu banking to be a mix of formal and informal institutions.