History of the Esusu Thrift System

The Esusu is a contributory thrift system among a particular group of people who have come together to save their funds. Usually, every member of the group is supposed to contribute a set amount monthly, this is then disbursed to a member of the team and is rotated subsequently among each member monthly until every group member has a turn. In small communities and at offices, Esusu is a popular method of savings that has gained ground worldwide.

Brief History of Ajo

One must wonder what led to the invention of this interesting saving scheme in Nigeria and other parts of the world, and its evolution over time. The Esusu thrift system, also known as Ajo in Yoruba, dates back to the 1950s when Late Pa. Alphaeus Taiwo Olunaike popularly known as Alajo Somolu started a thrift collection. Alajo Somolu was the only surviving child of a set of triplets born in the western part of Nigeria in the early 1900s. He attended St John’s school Arolaya, Lagos in 1927 and then joined Christ Church Cathedral School Lagos to continue his studies. In 1936 he joined a tailor called Rojaye where he worked as an apprentice and gained his “freedom” 9 years after. He was fortunate to embark on a trip with his uncle to Cameroun, where he first learnt of the ajo thrift from a neighbour. Upon his return to Nigeria, he started his own thrift business popularly called Alajo Somolu. During the is period, there were no calculators or modern methods of putting figures together, but Taiwo was able to put together numbers in his head and could give his customers first time information about the status of their savings including their balances. It became a banking system for those in his community, who trusted him with their savings. Traders in Somolu, Lagos where he started his ajo business, where his major customers and he was nicknamed Alajo Somolu.

This Esusu thrift system was perhaps the first form of banking in Nigeria, as it started to spread and gained wide acceptance amongst people in small communities around the world. Soon it spread to different parts of the country. In modern-day Nigeria and different parts of the world, the Esusu thrift system continues to thrive. Employees in different organizations come together in small groups to create an Esusu system of their own, in a bid to encourage themselves to adopt a savings culture. A lot of people swear by the reliability of this savings method and its effectiveness in helping them achieve major savings milestones, as well as purchase assets they couldn’t bring themselves to save up for.

Esusu is not only common in Nigeria, but also has roots in Togo, Ivory Coast, the Bahamas and even Northern America. It is also common practice in China and Japan where the American Hui and the Japanese-American Tanomoshi respectively, carry out all investment banking functions within their small ethnic groups. They give out loans to local traders and can gather information about potential borrowers, a task that most Banks would not be involved in.

Benefits of the Esusu Thrift System.

1) Encourages accountability: This method of savings involves a group of people usually more than two, therefore it forces an individual to be committed to their part of the contribution. Unlike in a personal savings plan where you do not have to report your savings to anyone. The sense of obligation that comes from the Esusu thrift system compels an individual to fulfil their part of the deal.

2) No access to the savings: Unlike a personal savings plan, the Esusu thrift is usually kept in the hands of one of the trusted members and no other member has access to the funds unless is their month to take home the total contribution. This fosters financial discipline amongst the members of the contribution scheme.

3) Helps with project funding: Due to the method of disbursing funds to the members, an individual gets to take home the total contribution in a month, which means he can use the bulk sum to fund a project. Some people have purchased lands and properties as a result of this, while others fix the funds in profitable investment opportunities.

4) It is free of charges: This contributory scheme is free of charges, unlike the modern-day banking saving platforms. This is also one of the things that attract individuals to scheme.

5) Means of raising capital for your business: Just like in project financing, the contributions made can be used to fund a startup of any of the members. This is a very big plus of the Esusu thrift system and many people have started their businesses using this method of funding.

The Future of Esusu Thrift.

This unique thrift system would be around for a long while, with different platforms seeking to modernize it by digitalization and reaching out to a larger number of people. Some Nigerian banks have formed an Esusu savings system for their customers to make contributory savings and some fintech startups are also keying into the modern Esusu thrift system. With this development, it seems like the Esusu thrift system will continue to be a method of savings in different communities around the world, as it keeps buying its way into the hearts of different classes of people in the economy.

For a very long time, small traders, and groups of people at work and other organizations continued to engage in the Esusu thrift system without knowing its origin. The thrift system is built solely on trust as every member is expected to fulfil their end of the bargain by putting down a stated amount of money every month. So many people have been taken off the beds of poverty due to this invention and have built successful financial legacies of their own. The Esusu thrift system might not be a contemporary method of savings especially in a world of banks and investment houses, but one cannot deny the positive impacts it has had on different societies in the world.