The Susu Collection System in Ghana and experiences in linking formal and informal financial intermediaries

The Susu Collection System of Ghana

Susu collection is one of Ghana’s most ancient traditional banking systems. In the Akan language, the term ‘Susu’ means “small small” as to indicate the saving contribution paid on a daily basis by those economically active poor that decide to join the scheme. In particular, Susu collection is a system in which a person (e.g. a trader, an artisan, etc) decides to make a daily contribution to another person, the Susu collector, for an agreed period, usually a month (31 days). For the deposit collection service, the Susu collector is remunerated with a fee. Hence, the Susu Collection system provides a way for saving up (Rutherford 1999), i.e. saving small amounts of money over a period of time to build a lump sum that may be used when needs arise in the future (See Figure 1). The typology of clients engaged in the Susu collection scheme spans through a great variety of socio-economic and occupational groups running micro and small businesses in the informal sector such as petty traders, farmers, salaried workers and artisans that are normally excluded from mainstream banking.

Post 3 Figure 1


Figure 1: The Susu Collection System

Source: Author

 Why do people participate in the Susu Collection system?

1.      Accumulation of working capital and consumption smoothing: The ‘saving up’ (Rutherford 1999) mechanism of the Susu collection system allows clients to accumulate financial resources to be invested in their business. Coherently, Aryeetey and Steel (1994, 6) argued that for Susu contributors, «…the contractual savings are a form of financial management to ensure the working capital need to restock supplies, from which they earn a stream of profits». Moreover, the possibility to accumulate a lump-sum may reduce the impact of major expenses, such as school fees or weddings.

2.      Convenience and low transaction-costs: The Susu system allows to overcome many of the transaction costs associated in dealing with formal financial institutions. First of all, Susu operators work directly with their customers by providing a door-to-door service. On the contrary, going to the bank would require a big effort from Susu clients in terms of time/costs required for the transportation and waiting-time spent at bank branches. Moreover, Osei (2007) reported that the majority of low-income individuals have no access to mainstream banking because of the high deposit requirements for both opening and maintaining an account.

3.      Commitment to save and control mechanisms: Susu clients believe that only by giving their money to somebody else they will be able to transform tiny contributions in a lump sum that enable them to afford larger expenditures. Indeed, by paying the daily contribution to the Susu Collector, clients may release their money from competing financial claims coming from social obligations and domestic duties. Moreover, doing Susu “compels” clients to save and instils into them the habit of saving (Ashraf et al. 2003; Ashraf et al. 2006). In this sense, Susu collection, by inducing clients to maintain discipline in their savings pattern, is a conducive mechanism for commitment to save. These underlying roles of the Susu system may justify the clients’ preparedness to accept a negative interest on their savings (Rutherford 1999; Ashraf et al. 2003; Ashraf et al. 2006; Collins et al. 2009).

4.      Close relationship: Susu operators normally live in the same area of their contributor (proximity) and for the clients dealing with agents from the local community that have a familiar appearance and speak the same language facilitates transactions and further reinforce the sense of trust (Awasu 2012). Indeed, in the absence of any contractual obligation, the Susu system is entirely dependent on the trust that clients have on the Susu collector: clients need to feel confident that, at the end of the saving cycle, the Susu collector will return them the money accumulated along the period.

The weaknesses of the Susu collection system

1.      Loss of value in the client’s savings: inflation may erode clients’ deposits since no interest is paid on the savings accumulated (Osei 2007). In addition, because of the commission paid to the Susu collectors, the amount accumulated at the end of the saving cycle is less than the sum of the daily payments, thus the implicit interest rate is negative (Aryeetey and Steel 1994).

2.      Access to credit facilities for Susu contributors: The Susu collection activity is concerned with the aspect of saving mobilization and not with loan provision. Hence, Susu Collectors do not operate as a proper financial intermediary because they only manage their client’s savings and have limited access to capital outside the amount gathered through their daily collections. Therefore, they are reluctant in providing credit facilities to their clients for the fear of being over-exposed in the case that debtors are unable to repay the loan received, thus precluding other Susu contributors to receive back the money deposited. In addition, in compliance with the ‘Operating Rules and Guidelines for Microfinance Institutions’ issued in July 2011 by the Bank of Ghana, Susu Collectors are prohibited by law to engage in any lending activity. Yet, Susu Collectors are still allowed in providing advances to their clients before the end of the saving cycle.

3.      Security of deposits:Susu collectors normally complete their rounds late in the evening when bank branches are already closed to the public. Hence, they are forced to carry to their houses or offices the deposits mobilized during the day and this may expose them to the risks of robberies or thefts (Derban 2007; Osei 2007). In addition, the trusting relationship between Susu Collectors and their clients may also be abused. Despite this is not the norm, there are some reported episode of Susu Collectors that cheated their trustworthy clients by running away without returning their funds at the end of the saving cycle (Aryeetey and Gockel 1991; Derban 2007; Osei 2007).    After having analyzed the characteristics, strengths and weakness of the Susu Collection system, Chapter 4 describes the Barclays Microbanking Initiative as a particular application of the “linkage banking” model introduced in Chapter 1.


Aryeetey, E. and Gockel, F. (1991) ‘Mobilizing domestic resources for capital formation in Ghana: the role of informal financial markets’, AERC Research Paper n°3, August, Initiative Publishers, Nairobi

Aryeetey, E. and Steel, W. (1994) ‘Informal Savings Collectors in Ghana: Can They Intermediate?’ Finance and Development, Vol. 31, Issue 1, pp. 36-37

Ashraf, N., Gons, N., Karlan, D. and Wesley, Y. (2003) ‘A Review of Commitment Savings Products in Developing Countries’, Abdul Latif Jameel Poverty Action Lab, Massachusetts Institute of Technology, Cambridge

Ashraf, N., Karlan, D. and Wesley, Y. (2006) ‘Deposit Collectors’, Advances in Economic Analysis and Policy, Vol. 6, Issue 2, pp. 1-22

Awasu, C. (2012) Relational transactions: the social dynamism of informal finance in Ghana’, African Journal of Social Sciences, Vol. 2, Issue 4, pp. 1-15

Collins, D., Morduch, J., Rutherford, S. and Ruthven, O. (2009) Portfolio of the poor. How the World’s Poor Live on 2$ a Day, Princeton University Press

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

Rutherford, S. (1999) The Poor and Their Money, DFID, Oxford University Press, New Delhi, India.


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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