A youth’s call for people to respect this informal means of saving and understand the need for financial institutions to accept it.
By Zandra Gomes
Dear young people, if you live in Trinidad and Tobago, you’ve probably heard the words ‘pyramid/ponzi scheme’ or ‘drug sou sou (DSS)’ on the news or social media platforms quite often in the past few months. While these pyramid schemes may take many forms, they are often falsely presented as ‘sou-sou’ arrangements. However, we must ensure to not mistake one for the other.
Sou sou arrangements were brought to the Caribbean during slavery and it has survived post-emancipation society as an informal method of saving for those who were denied access to formal financial institutions.
Today, the practice is still used by those who are unable to access the formal financial sector (due to the inability to meet the requirements to open a bank account or collateral requirements to obtain a loan etc), as well as those who seek to avoid the fees, bureaucracy and other legal documentation associated with conventional financial systems.
By providing an avenue for individuals who are excluded from the formal system to save and to obtain the necessary capital for establishing businesses and investing in other activities, sou sous have effectively contributed to the economic development of the private sector, which is a major engine of growth for our local economy.
Therefore, to associate this informal but important method of finance with corrupt activities such as pyramid schemes, is to misappropriate the ‘sou sou’ name which could unjustly undermine the worth of the practice and contribute to the negative stigma attached with it.
As young people, we must reject the schemes but respect the sou sou. We ought to understand that sou sous have been and continue to be an important financial device for marginalized individuals in Trinidad and Tobago and we must not discredit the practice.
However there’s a problem.
Sou sous are not considered a legitimate source of income by the banking institution of Trinidad and Tobago.[i]
Thus, in 2019 when we converted our $100 bills to the new polymer bills, individuals who claimed their funds were from a sou sou were unable to deposit their funds into a bank account or exchange them.
With the existing limitations associated with the formal banking system in Trinidad and Tobago in which many citizens cannot meet, how could we not accept a traditional business practice which fills this access gap by providing a financial alternative for these marginalized individuals?
I believe to reject this practice as a legitimate source of funds is to further neglect these marginalized individuals, ultimately escalating the existing inequalities in financial inclusion that persists in Trinidad and Tobago.
So what’s the reason?
Sou sous aren’t considered a legitimate source of funds for several reasons such as the potential of money laundering and financial corruption as they are unregulated.
However, to simply say that this means of savings cannot be accepted and leave it as that, in a country where the informal sector is so large and many people use sou sous to fulfil their need for both savings and access to credit, is not enough. Given their prevalence and importance, sou sous will not, and I believe should not, go away.
Thus, the formal financial sector should not dismiss this practice but rather find a method of accepting or incorporating it.
What can be done?
If we don’t know how to do something, why don’t we look at what others have done to find suggestions for measures in which we can potentially adapt?
In the Region
Rather than denying persons from depositing money obtained through sou sous into financial institutions , in October 2019, Grenada established procedures and guidelines for persons doing so. Individuals are required to show proof of their source of funds. According to a Now Grenada article “Proof includes a document from the leader of the sou-sou confirming that the person participated, the number of members, and other documents that will confirm that the money was not gained contrary to the money laundering laws.” So, what’s stopping us from adopting similar measures?[ii]
In the World
The Mae Foundation, a financial institution in New York which helps banks channel mortgage loans into underserving areas, accepts sou sous as a source of funding. In an article the senior Jackie O’Garrow claimed “We have accepted this form of non-traditional savings. We were hearing from our members that with the growth of the immigrant community this is a very frequent practice.”[iii]
Additionally, in 2005, Barclays Bank Ghana established a deposit-loan system using sou sou collectors in an attempt to connect modern finance with sou sou collection in Ghana. According to an article “Barclays Bank does not seek to replace the Susu collector or take away their business. Barclays Microbanking seeks to simultaneously improve the Susu collector’s business by providing training to them and their clients, giving them additional legitimacy through their relationship with the bank and allowing them to offer loans to their clients.”[iv]
Why don’t our local financial institutions consider utilizing similar measures in an attempt to embrace this informal traditional means of savings?
I cannot say that any of these measures can certainly work for us in Trinidad and Tobago. However, I do believe that understanding external approaches and discovering what aspects of them can or cannot work for us and then developing a measure that can be feasible is the first step in addressing the problem.
Dear fellow young people, we are never too young or too inexperienced to question the status quo, highlight the flaws in our existing systems, identify the root causes of current problems or work on potential solutions. Our opinions hold great value and through education, discussion and collaboration, we have the potential to contribute and develop a much needed solution for the acceptance or inclusion of sou sous into our financial sector.
[i] Hunte, C. (2019). No ‘sou sou’ funds allowed. [online] Trinidad Express Newspapers. Available at: https://trinidadexpress.com/news/local/no-sou-sou-funds-allowed/article_c8f94a58-1d46-11ea-91e9-f73545871c6d.html [Accessed 23 Oct. 2020].
[ii] Straker, L. (2019). Sou-Sou money now to be declared | NOW Grenada. [online] Now Grenada. Available at: https://www.nowgrenada.com/2019/10/sou-sou-money-now-to-be-declared/ [Accessed 23 Oct. 2020].
[iii] Abramsky, S. (2000). NEW YORKERS & CO.; Newcomers Savings and Loan (Published 2000). The New York Times. [online] 22 Oct. Available at: https://www.nytimes.com/2000/10/22/nyregion/new-yorkers-co-newcomers-savings-and-loan.html [Accessed 23 Oct. 2020].
[iv] http://www.globalhand.org. (n.d.). Linking Traditional Banking with Modern Finance: Barclays Microbanking – Susu Collectors Initiative | Corporate NGO partnerships. [online] Available at: https://www.globalhand.org/en/search/all/document/33806?search=microfinance [Accessed 23 Oct. 2020].