Barclays Microbanking Initiative – partnering with Susu Collectors

Choosing the best intermediary: the competitive advantage of Susu Collectors

Believing that «bringing ‘unbanked’ people into the mainstream of financial services is an integral part of responsible banking» (Barclays PLC 2006, 9), in 2005, Barclays Bank Ghana (BBG) introduced a Microbanking program aimed at developing business propositions for delivering substantial social benefits to the communities in which the bank operates. In particular, BBG downscaling strategy entailed the establishment of a strategic alliance with indigenous financial intermediaries largely used by low-income individuals. The underlying rationale for this approach was the belief that «…a truly inclusive society can only be achieved by supporting existing indigenous financial institutions that already provide financial services such as loans and savings to the least affluent» (Osei 2007, 8). In this regard, BBG approach may be considered as an implementation of the ‘linkage banking model’ proposed by Seibel (1997) (See Chapter 1). In order to find the most appropriate partner, Barclays financial inclusion team interviewed a sample of potential beneficiaries of the initiative for identifying the financial intermediary they normally relied on and realized that the majority of them used the Susu scheme (Derban 2007). The reason was simple: «Susu collectors are down with the people» and linking with them enabled BBG to capitalize on the fiduciary ties existing between Susu operators and their clients.

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The ABC of Microbanking: Awareness creation, Banking services and Capacity building

At the core of Barclays Microbanking Initiative, BBG devised the “A-B-C of Microbanking”, a three pronged approach aimed at serving the needs of the informal sector by supporting existing financial intermediaries and their clients in the areas of Awareness creation (A), Banking services (B) and Capacity building (C) (Barclays PLC 2005).

  • A for Awareness creation: the awareness component was designed to help Susu collectors clients in gaining the confidence to use basic financial skills for the effective management of their money;
  • B for Banking services: BBG introduced specialized banking services for on-lending to the final clients and facilities for savings to be delivered through the “Dwetiri Current Account”. BBG also adjusted its opening hours in order to suit the lodgement requirements of Susu collectors, thus satisfying their needs for a safe place to keep the clients’ savings after their collection rounds. Furthermore, specialized bank tellers have been dedicated to deal with the specific requirements of the Susu collectors.
  • C for Capacity building: the capacity building program was aimed at providing training and support tailored to the needs of the participant Susu Collectors: considering that the Susu business is focused on saving mobilization, building the capacity for managing the lending activity was essential.

Linkages in credit allocation: the credit process under Barclays Microbanking Initiative

The configuration of the loan process under Barclays Microbanking Initiative mirrors the strength and and weakness of the formal and informal financial institutions involved (cfr. Seibel 1997; Armendàriz and Murdoch 2005) (See Table 1).

On one hand, Susu Collectors, because of the personal relation with their customers (end beneficiaries of the loan) and their ability in assessing the clients’ creditworthiness were responsible for collecting and evaluating the loan applications. On the other hand, BBG, that had a great amount of financial resources, but not the expertise for dealing directly with the end beneficiaries, intervened in the process by providing capital. In particular, loans were granted by BBG to the Susu Collectors who were in charge of paying out the loan to the selected clients. Then, clients reimbursed the loan on a daily basis by paying to the Susu collector an amount that depended on the size of the credit obtained. In order to cater for any default, Susu collectors agreed to create a contingency fund, i.e. depositing an amount of money equal to a percentage of the loan amount in a specific account in the name of BBG and the GCSCA as a form of cash collateral. In addition, as reported by Derban (2007), an insurance against death or sickness of the Susu collector was also established.

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Figure 1: The loan process under Barclays Microbanking Initiative

Source: adapted from Napier (ed) (2010)


The major outcomes and challenges of Barclays Microbanking Initiative

The Barclays Microbanking Initiative was very promising and for the first two years it generated very positive outcomes. From the perspective of BBG, the Microbanking scheme allowed to expand its deposit base, to cross-sell its products to the clients and to develop innovative solutions to cater for the needs of low-income individuals. Moreover, Barclays Microbanking Initiative benefitted the Susu Collectors by increasing their client base since many informal entrepreneurs joined the Susu scheme attracted by the possibility to obtain a loan to improve their business and thereby their income and living conditions.

Yet, many difficulties emerged in the program as well. Among these, the most important ones are the following:

  • Risk allocation among the various actors involved in the loan process: from the perspective of the Susu Collectors, since the purpose of the credit facility was to provide capital to be on-lent to Susu contributors, the program lacked of a third party institution or some policies to intervene in case of client’s default without affecting Susu collectors.
  • Clients’ default and embezzlement from Susu Collectors: On one hand, some of the beneficiaries that received the facility were unable to pay it back due to difficulties experienced in their business that hindered the generation of a sufficient income to cope with the repayment or because of an inappropriate allocation of the funds borrowed. On the other hand, some of the Susu collectors involved in the Microbanking Initiative diverted the funds received to personal purposes instead of on-lending the capital to their clients. Since the money was locked in long-term investments (e.g. purchasing of a car or a land property), these Susu collectors were unable to generate the proper liquidity to reimburse the loan. Other also raised the interest rate for increasing their remuneration or shortened the repayment period (cfr Conning and Kevane 2003).
  • Multiplicity of loans in the system: some of the Susu collectors already engaged in the ‘Barclays Microbanking Initiative’ also accepted credit facilities to be transferred to their clients from other financial institutions. This accumulation of loans, coming from different sources and at different conditions, generated a situation of over-indebtedness for some beneficiaries, thus putting further constraint on the repayment phase both for the Susu collectors and their clients.

Because of the challenges experienced during the program, the Barclays Microbanking Initiative was suspended in 2010. In the same year BBG started a new financial inclusion program, Banking on Change, which builds on the idea of ‘savings-led community finance’, a methodology that allows individuals in a community to join a group in order to save regularly and access small loans from a fund constituted within the group


Armendàriz de Aghion, B. and Morduch, J. (2005), The economics of microfinance, USA: Massachusetts Institute of Technology

Barclays PLC (2005) Corporate responsibility report 2005: responsible banking, London, Barclays PLC

Barclays PLC (2006) Corporate responsibility report 2006: responsible banking, London, Barclays PLC

Conning, J. and Kevane, M. (2003) ‘Why isn’t there more financial intermediation in developing countries?’, WIDER Discussion Paper, United Nations University

Derban, W. (2007) ‘Linking indigenous financial systems to Banking: the case of Barclays Microbanking’, Third Annual Microfinance Conference, Cape Coast, Ghana, 10-11th January

Osei, R. (2007) ‘Linking Traditional Banking with Modern Finance: Barclays Microbanking – Susu collectors Initiative’, New York, UNDP

Seibel, H. D. (1997) ‘Upgrading, Downgrading, Linking, Innovating. Microfinance development strategies. A system perspective’ Economics and sociology Occasional paper 2371, Columbus, Ohio, Rural Finance Programme


Roberta is from Padua, Italy. She holds a Dual degree in Business Administration and International Business and a Master's Degree in Economics and Management for Nonprofit Organizations. She is passionate from microfinance and this interest has emerged when starting to collaborate in a microcredit project run by an Italian association. Last year, she also spent two months in Ghana researching models for linking indigenous financial intermediaries (Susu Collectors) with the formal banking system. Roberta is now collaborating as a Kenya Country Liaison Intern at Zidisha Inc, a peer-to-peer microlending service that offers direcy interaction between lenders and borrowers worldwide. She is willing to further her education in the field of Development Finance and she dreams of traveling across Africa to learn more about entrepreneurship and the use of financial services in the continent.

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