“Susu,” meaning “small-small,” is one of West Africa’s oldest methods for people to informally save small amounts of money.
Private Susu, or “tontinier,” collectors go door-to-door, collecting daily savings from mainly low income populations. Sometimes, the collectors make loans from the pool of funds. These independent collectors operate individually and informally, providing direct financial services to their clients. But do Susu collectors represent competition for MFIs or an opportunity to be leveraged?
In Benin, Coopérative pour la Promotion de l'Epargne et du Crédit (CPEC) decided to create its own team of Susu collectors. The goal? To determine if they could cost-effectively provide the same doorstep savings services as private Susu collectors, but in a more formal and secure manner.
CPEC began their experiment two years ago, and the business model appears to be working. “It took us a year of talking to informal Susu collectors before determining a business model that works,” says Télesphore Afouda, Marketing Director of CPEC. “It is important to spend time identifying the needs of the Susu collectors and the risks and opportunities you can share with them. Only then can you propose a strong business model.”
CPEC developed an operating agreement to create their own team of Susu collectors who act as agents under the CPEC banner. Now, new collectors under the agreement may use CPEC branding and the CPEC mobile app for collections, differentiating them from pre-existing independent Susu collectors. Under the operating agreement, the CPEC Susu collectors can earn on average $10/day, paid for by a fee collected from clients totaling 1/31 of the savings deposited. Because the government is cracking down on independent Susu collectors, partnering with an organization like CPEC is fast becoming their only option in the medium-term to stay in business.
For clients, the Susu collector channel offers convenience and the security that their funds are with a reputable organization. The collector still manages the risk of carrying cash. To mitigate this, CPEC’s Susu collectors are covered by a multi-risk insurance contract for up to $100 per agent. If an agent collects more than $100, s/he must deposit the money in a CPEC branch or bank account. The amount collected is tracked and monitored through the mobile application and clients receive a receipt and an instant SMS alert. Collectors can initiate account opening in the field, but the account is only officially opened when they return to the CPEC office. Customer have the option of conducting transactions in the field or visiting the CPEC branch for confirmations and/or transactions.
As of October 2016, CPEC’s Susu collectors are serving 9,607 clients, who have opened over 26,000 accounts. Clients are opening multiple accounts to save toward different goals. For example, a client might have an education savings account in addition to a general savings account.
CPEC is continuing to tinker with the Susu model. Télesphore Afouda’s approach to the collectors is philosophical. “The reality is that we can’t be everywhere, and the Susu collectors are near the population. We have to work with them and find the best business model to get them into the formal system.”
MicroLead, a UNCDF global initiative which challenges financial service providers to develop, pilot and scale deposit services for low income, rural populations, particularly women, was initiated in 2008 with support from the Bill & Melinda Gates Foundation and expanded in 2011 with support from The MasterCard Foundation and LIFT Myanmar. It contributes to the UN’s Sustainable Development Goals, particularly SDG 1 (end poverty), SDG 2 (end hunger, achieve food security and promote sustainable agriculture) and SDG 5 (achieve gender equality and economic empowerment of women), as well as the Addis-Abeba Financing for Development Agenda (domestic resource mobilization).
MicroLead works with a variety of FSPs and Technical Service Providers (TSPs) to reach into previously untapped rural markets with demand-driven, responsibly priced products offered via alternative delivery channels such as rural agents, mobile phones, roving agents, point of sales devices and informal group linkages. The products are offered in conjunction with financial education so that customers not only have access but actually use quality services.
With a specific emphasis on savings, women, rural markets, and technology, MicroLead is a performance-based programme that supports partnerships which build the capacity of financial institutions to pilot and roll out sustainable financial services, particularly savings. As UNCDF rolls out the next phase of MicroLead, it will continue to focus on facilitating innovative partnerships that encourage FSPs to reach into rural remote populations, build on existing digital financial infrastructure and emphasize customercentric product design.