Description of Challenge
Money will be collected from everyone in this committee and the money will be received by a different person at the end of each month in rotation, so that this person receives a sum of money at the end of the month.A Rotating Savings and Credit Association or ROSCA is a group of individuals who agree to meet for a defined period in order to save and borrow together. 'ROSCAs are the poor man's bank, where money is not idle for long but changes hands rapidly, satisfying both consumption and production needs'.
Solution
Meetings can be regular or tied to seasonal cash flow cycles in rural communities. Each member contributes the same amount at each meeting, and one member takes the whole sum once. As a result, each member is able to access a larger sum of money As the scheme develops and use it for whatever purpose she or he wishes.
This method of saving is a popular alternative to the risks of saving at home, where family and relatives may demand access to savings.
Every transaction is seen by every member during the meetings. Since no money has to be retained inside the group, no records have to be kept. These characteristics make the system a model of transparency and simplicity that is well adapted to communities with low levels of literacy and weak systems for protecting collective property rights.
The system further reduces the risk to members because it is time limited—typically lasting no more than 6 months. Each member receives the amount collected at least once. This reduces the size of the loss, should someone take funds early and not pay them back.
