Savings, Credit, and Banking

Traditional savings, credit, and banking institutions in Africa have not received the kind of attention they deserve; indeed, were it not for the interest of sociologists and economic anthropologists, the subject could be described as neglected. Writings on rural or traditional economy often lament the poverty of preindustrial credit systems in Africa, but no effort has been made to assess the degree of this poverty. Writings on banking and finance in colonial and postcolonial Africa avoid dealing with traditional financial institutions under the pretext that they were, strictly speaking, not banks. Indeed, these studies popularized the myth that Africans actually did not produce surplus wealth worth saving, and the little that was produced by quite a handful of the people was kept (as distinct from saved) in pots and buried in the ground, thus putting the money away from any possibility of its being put to immediate economic use by others. The more sympathetic general works on African economic history often treat traditional savings and credit institutions as mere footnotes. Sociologists have done more work on the field than historians, but they have left us with the impression of institutions as mere social rather than economic organizations. For example, N. A. Fadipe describes rotating savings and credit associations (henceforth referred to as ROSCAs), the ajo and esusu among the Yoruba, as “mutual help associations.” ¹ This misleading definition has been further slandered by A. G. Hopkins, who states that ROSCAs are “devoted mainly to social purposes, such as raising money for funerals.” ² It is necessary to correct such misconceptions and place ROSCAs in proper perspective as economic institutions which the level of societal sophistication and needs in preindustrial times could possibly devise.