In and outside of the inner cities and just about everywhere Black Americans and immigrants call home, there remains one interesting way in which many save substantial amounts of money. It’s called a sou-sou, a rotating savings club that includes a group of individuals who gather to contribute an equal amount of money into a fund.
The money is collected either on a weekly, twice-a-month or monthly basis and comprises a pool – or, as most involved refer to it as, a hand. Each payout goes to members in specific, but prearranged, order and it rotates until all members have received an equal share.
“The way I’ve seen Black people come together to rent out Black Panther theaters and get sou-sous popping for early tickets … do not tell me we can’t come together,” Chloe A. Hillard wrote on Twitter.
In a 2017 article titled, “How the Black Community Took Banking into Their Own Hands,” MarketWatch.com quoted the Federal Deposit Insurance Company when it reported that more than 18 percent of African-Americans don’t have traditional bank accounts, compared with 7 percent of all Americans.
But where banks don’t fit the bill, communities have created their own solutions, including grass roots traditions and minority-owned banks and credit unions, the report said.
“People turn to the alternative forms of financing and credit because they don’t have the same access [to mainstream services],” Vicki Bogan, associate professor of economics at Cornell University, said in the article. “And that’s perfectly rational.”
The article continued:
For much of American history legislation restricted minority access to mainstream financial services. Segregation and Jim Crow laws barred Blacks from regular banks and forced them to look for other options.
One informal alternative was a sou-sou.
“Saving has always been a challenge for me. While I continuously applied the pay-yourself-first principle to my finances, I struggled to stick to my budget,” Kerry McDonald, a freelance writer and mother of two young boys, wrote for kerryfreelancewriter.com. “So, when I wanted to start a cake-decorating business, I needed another way to pay my startup costs. I preferred not to take out a loan because of interest charges. When my co-worker suggested we start a sou-sou, I was ecstatic and thankful for her excellent suggestion.”
As detailed in Essence magazine, here is how sou-sous work:
The group elects a treasurer who will collect the members’ contributions. She will also create a payout roster, or members can request to receive their hand at any given date during the cycle. Everyone agrees on how much and how often they want to contribute. If ten members are contributing $100 a week, each week a member will receive a $1,000 hand or cash lump sum. The cycle begins again after ten weeks. Any member who can afford it, can also double their contribution and get paid two hands in one cycle.
There is no interest to be collected, so you will always get out the exact amount that you put into the pot.
Sou-sou, which comes from the Yoruba term “esesu,” originated in West Africa, but is practiced in many African and Caribbean countries. Over the years, sou-sou has evolved, but the basic concept remains the same. Somalis call it “hagbad” or “ayuuto”; in Jamaica, it is known as a “partner”; in Guyana, a “box hand”; Haitians call it a “min”; and if you are Southern African, you may know it as “stokvel.”
Cooperative economics grew from mutual benefit and relief societies from the turn-of-the century when large numbers of immigrants from the Caribbean and migrants from the American South, made their way to urban areas like New York, Detroit, Boston, and St. Louis. With no official channels – city, state, or federal, in place to stabilize these quickly evolving communities, the newcomers banded together. Creating some of the nation’s longest social services platforms, including the Trinidad Benevolent Association, the American West Indian Ladies Aid Society, and the Bermuda Benevolent Association, operated according to sociologist / author Ira De Augustine Reid for: mutual benefit and relief, economic and political adjustment in the U.S.; and the perpetuation of desirable conditions in their homelands.
While the sou sou paid for mortgage and business down payments, other regular outings, literary forums, and gatherings paid out death and sick benefits to its members. Then, like now, the concept of collective or group economics and self-sacrifice remain central.
For McDonald, it meant cutting out a regular expense.
“I needed to free up some money to go towards my sou-sou, so I decided to eliminate one bill from my monthly budget,” McDonald said. “I compared my cable and internet bills to see which was costing me more and canceled my $50 per month cable service – a whopping savings that helped me start my business.”
To find out more about sou-sous, visit www.investsousou.com.