cooperative
A cooperative is a group that pools its members' money to save and lend to each other, and millions of Nigerians rely on one.
In plain English
Long before anybody in Nigeria used the word fintech, communities were solving credit among themselves.
A cooperative pools contributions from members and lends them back to members. Sometimes it is at a workplace, deducted from salaries. Sometimes it is a market association. Sometimes it is a rotating contribution where each member takes the pot in turn, which many will know as esusu or ajo.
What makes them work is not paperwork. It is that everybody knows everybody, and defaulting means facing people you will see next week. That social pressure enforces repayment more effectively than most banks manage with lawyers.
The advantages are real. Access to credit for people no bank will lend to. Rates far below a loan shark. Forced saving through regular contribution. And a habit, which is worth more than any single loan.
The risks are equally real and less discussed. Poor record keeping. One trusted person holding the money. No regulator and no recourse when it goes wrong, and it does go wrong, and when it does the loss is often total.
Join one that keeps proper records, holds funds in a proper account, and where more than one person can see the books.
Twenty colleagues each contribute ₦50,000 a month. Every month, one of them receives the full ₦1 million. Over twenty months everybody receives exactly what they put in, and each of them got access to a lump sum they could never have saved alone in one month.
Questions people ask
What is the difference between a cooperative and esusu?
Esusu or ajo is usually a rotating contribution where members take the pot in turn. A cooperative typically pools savings and lends them out. Both rest on trust rather than paperwork.
Are cooperatives safe?
As safe as their record keeping and their people. Insist on written records, a proper bank account, and more than one signatory. Most failures come from one person holding everything.
Should I use one instead of a bank?
They complement each other. A cooperative can provide credit no bank will offer, but your long term savings deserve a regulated home.
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