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In the face of financial difficulties that systemically affect the middle and lower classes, individuals and communities have historically questioned systems and ways to ensure their economic survival. In a context where most of the population of the Global South is denied access to the formal financial system, many people have consistently resorted to alternative strategies to guarantee their wellbeing and that of their communities for generations. This blog discusses two very similar community-based financial systems, جمعيات الشهرية (jama’ayat ashaharya or monthly rotating savings group) prevalent in the Middle East, and the Tontine, mainly used in Western Africa, which represent effective strategies to overcome economic hardships and strengthen social cohesion. These financial systems are most often formed by women from the middle class or more precarious economic conditions and have historically been a fundamental aspect of the social fabric of the Middle East and Western Africa, as of other parts of the world where similar systems can be found. In Jordan, the Jami’yat is not a tool to foster economic wellbeing only among Jordanian citizens; migrant workers also adopt it to support their livelihood. Through these systems, the members deposit a specific sum of money each month, and each month, one of the members gets the amount collected. These organizations allow their members to gather the financial means to support daily life expenses, invest in personal and business projects, and the well-being of their communities. For these reasons, Jami’yat and the Tontine are two emblematic examples of how the localization of services can lead to various social benefits, especially when these services are otherwise inaccessible to most of the population.
Withstanding exclusion from the formal financial system
In an interview, Madam Afiavi Koublanou, a resident of Dakar who is part of various tontines, affirmed that people create the tontines to overcome “financial, social and cultural needs”. She explains that “people need the money, because the economic problems are there, the health issues are there, but the banks are not there for everyone”. She criticizes the inaccessibility of the formal financial system in Senegal, especially for individuals that did not have an extensive access to the formal education system. Dr. Ghadeer Hamdan, a professor living in Amman, reports a similar dynamic during an interview, where she explained that also in Jordan the access to the formal financial system is restricted in base of your socio-economic status.
The explanations presented by Madam Afiavi Koublanou and Dr. Ghadeer Hamdan are corroborated by the data provided by the IMF and the Central Bank of Jordan. According to the IMF, the access to credit is still a major challenge for most women in West Africa. Only 5.1% of them have access to credit and less than 37% of them have a bank account.[1] In Jordan, the Central Bank of Jordan states that “as of 2017, 67% of people above the age of 15 years did not have access to the formal financial system in terms of account ownership; 38.0% of adults were excluded from any formal financial services and 24.8% of adults were completely excluded from any formal and informal financial services.”[2]
For these reasons, Jami’yat and the Tontine become a key tool to have “access to an amount of money that most people would not be able to save alone”, according to Madam Afiavi Koublanou. By using these systems, people are also able to avoid the high interest on loans, which often represent insurmountable economic obstacles and are both forbidden and unethical under Islamic law. Finally, these two systems of micro-financing represent a fundamental support to socio-economic flourishment and survival in a context where the formal financial system is not accessible to the majority of the population.
Socio-economic benefits and flourishment
The Jami’yat and the Tontine are simultaneously financial and social systems, and for this reason, they have a widespread beneficial impact on the communities where they are implemented. Indeed, they give a chance to gather sums of money, otherwise impossible to collect by one individual, that are often used to realize entrepreneurial projects, to pay for medical and school bills and to economize.
At the same time, the benefits of Jami’yat and the Tontine are not limited to these financial aspects. On the contrary, these systems are defined in tandem by their participants, and they “create affinities between members. The Tontines promote mutual trust, solidarity and support within the group”, according to Madam Afiavi Koublanou. They also become a powerful collective tool to diffuse financial knowledge between the community and to support the members who “don’t know how to manage credit and how to save money. Participants have the opportunity to get accustomed to money management.” In addition, in Senegal, the Tontines are a mechanism that helps counter gender inequality and empower women. Madam Afiavi Koublanou explains that “the tontines offer the possibility of being financially independent to women. They also allow them to take initiatives and to improve their life conditions and those of their families.”
In Senegal, the Tontines represent a useful strategy to compensate for the lack of services provided by the welfare state and they become key to individual and collective survival. For example, if one of the members of the tontines is sick and needs medical assistance, the members of the Tontine will decide to devolve the money collected for the session to that member, even if it wasn’t their turn yet.
On the other hand, in Jordan, the participants of the جمعيات الشهرية tend to stick with the rotation chosen at the beginning. At the same time, the social ties and networks that the جمعيات الشهرية promotes and solidifies are still used to help members of the community. During an interview, Dr. Huda Abu Qtaish and Dr. Dana Alkaraki, two professors in Amman, clarified that “when there is an emergency, we raise money from each other and put it aside for him or her. This is a different thing. We have this in Islam, we call it Takaf al-Ijtima’I, and it means that if we know that there is someone who needs help, we will help them in any way we can.”
In conclusion, The Jami’yat and the Tontine are two important testimonies of how localization can be a successful tool to bring economic and social wellbeing. In addition, they are an important reminder of the oppression that the globalized financial system continues to perpetuate today, especially against people in the Global South. At the same time, the Jami’yat and the Tontine demonstrate that civil society, when organized around solid community-based networks and ties, can lead to successful forms of resistance to neo-colonial dynamics and policies. They show that civil society can create alternative socio-economic systems that thrive outside of the oppressive and individualist paradigms of a capitalistic neo-colonial apparatus, which strives for the protraction of global inequalities and the exploitation of the workforce.
[1] Faye, M. (2024, July 24). Microcrédit : Comment Les Prêts transforment la vie des femmes entrepreneuses en Afrique de l’Ouest. BBC News Afrique. https://www.bbc.com/afrique/articles/cg3e0xp3gp4o
[2] Financial inclusion report 2018-2020 – amman. (2021, March). https://www.cbj.gov.jo/ebv4.0/root_storage/en/eb_list_page/financial_inclusion_report_2018_-2020.pdf
