Protective sacking (Africa)

The protective sacking in sub-Saharan Africa, also called contributions is a popular system of saving and credit.

Operation

There exist two big families of protective sackings: the rotary protective sackings and the accumulatives protective sackings .

rotary Protective sacking

The participants of a protective sacking commit themselves paying a predetermined sum at a given frequency. For each turn of payment, one of the participants is indicated to benefit of the funds of the other participants. Two modes of nomination of the recipient exist: either there is drawing lot before each payment, or the drawing lot is made only once at the beginning of the cycle and the participants profit from the payments according to the number which they drew with the fate.

When all the participants were profit funds once, the cycle of the protective sacking is finished. At the end of the cycle (when all the participants already received the payments) a new cycle is generally started.

For the first recipient, the protective sacking is connected with a Crédit. For the last participant, the protective sacking is connected with a saving.

The number of the participants in a protective sacking is in theory known at the beginning of the cycle. However, other members can join the protective sacking before all old the partiticipants profited from the funds. In this case, each new arrival gives its saving to each former participant who already perceived the payments. The protective sacking is very much used by modest groups of women of the French cities.

accumulative Protective sacking

In a accumulative protective sacking, the contributions are not redistributed with one of the members but are not accumulated in the case of the protective sacking. The funds thus collected belong to the protective sacking until the members decide to carry out a division, i.e. to redistribute all the money accumulated with the members, in proportion to what they cotisé.

Meanwhile the money of the protective sacking is invested way in which the members decided some collectively. Generally, the funds are granted the members in the form of credit. The conditions of the credit are collectively decided (conditions of obtaining, duration, interest, expiries of refunding, covering and sanctions in the event of delay in refunding, etc) Ainsi the members borrow near the protective sacking to undertake economic activities. They refund then the protective sacking, capital and interests. The appropriations being often short with relatively high interests, the cash in hand increase quickly, which makes it possible to the members to borrow more, longer, and thus to develop their business gradually. At the time of the division, the members receive definitely more than what they cotisé. Thus, those which have before any need to save and those which have before any need for credit find all their account there. The important sum thus recovered can allow a longer-term investment, or to face a foreseeable important expenditure (family religious holiday or, school fees, etc).

Moreover, the accumulatives protective sackings often offer services of insurance to their members, in the event of accident, of disease, death of a close relation, etc These insurances can take the form of exceptional contributions (which are given to the afflicted member) or of emergency appropriations, without interest and with a flexibility in refunding.

These protective sackings are a sharp success in Africa thanks to the pallet of the finance departments which they offer (saving, credit, insurance), and this in an extremely flexible, accessible and competitive way.

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