Finance pooling: the self-coordination of ‘Esusu’ saving scheme among traders in local Nigerian markets

The existence of the informal economy is crucial to the growth of local and community development. This study aims to provide a broad understanding on the mechanisms and strategies put in place by local traders to carry out successful saving schemes despite the absence of a corporate structure. ‘Esusu’ (pooling finance) is a well-known practice historically especially in developing countries, though known and called by different names in different countries and tribe, it’s contribution in enhancing economic and financial development at the local level remains relevant. However, there are significant gaps that are yet to be explored especially in the coordination of these saving scheme in the local urban market within the informal economy. This research raises the awareness on the processes involved into setting up a saving group, it takes a deeper look into the coordination aspect and insight were gathered from different coordinators of these said groups identified within the study population and location. The paper provides comprehensive insights into the operationalization of saving schemes, the role of the coordinators of the group, the challenges of organizing such group, social trust relationship that is employed in establishing these groups, and the preference of the scheme over formal financing institutions. The study combines a mixed method approach using qualitative and quantitative through interviews and descriptive statistics. The study finds out that ‘Esusu’ in the market-place remains the highly preferred means for small business owners to get access to credit facilities. It also reveals that, despite the vulnerability of different groups being exposed to several risks of default by the members of the groups, the willingness to become part of the group remains high. Additionally, drawing on existing literature that classifies these saving scheme as poor man’s bank, it remains evident in this study that the participants of these groups cannot be entirely classify as poor using the yardstick of what the standard recognition of what ‘poor means by the World Bank of living below $2.15 per day.