More on Sou-Sou's

In jra’s thoughts an overview of an effective informal savings generator:

The ROSCA is known as a “sou-sou” in west Africa, or at least in Nimba county, Liberia. Sousous run for a fixed term, based on the number of members. If there are 10 members and the contribution is $10, each month one of the members will get $90 (9 other members * $10 each). At the end of ten months, the sousou can either be restarted, or the membership can be renegotiated (for example, to drop people who failed to pay on time during the past sousou period). If the sousou is reconstituted with more or fewer people, it doesn’t really change anything, it just runs shorter or longer until the next restart. Sousous run best when they are between 6 and 12 people for social and economic reasons (a 5x - 11x payoff is manageable in a cash society). The order of the payouts is determined randomly at the startup meeting of the sousou...[continue reading]