The grassroots money-management schemes many Muslim women bank on

Rotating savings clubs offer time-honoured solutions amid the ongoing cost of living crisis

High angle view of a pie chart made of colorful building blocks and red calculator on pink background. Photo by Getty Images
High angle view of a pie chart made of colorful building blocks and a red calculator on a pink background. Photo by Getty Images

When Najlah Sani-Omolori began her master’s degree, funding options were limited. She had already taken a postgraduate loan for a different course at another university, then decided to switch both subject and institution. The 24-year-old had to pay the remaining balance of almost £5,000 for the new degree out of her own pocket. With her entitlement to government support used up and not wanting to incur more debt, she turned to an informal savings group run by members of her local community in Leicester. 

“The main reason I first got involved was because it was interest-free, and because I could also choose a slot to get a bulk payment in line with when I needed it,” she says of the scheme. “For example, I needed my tuition paid by a certain time, so I chose a slot that would ensure that I got the money by then.” 

The group, of which project management analyst Sani-Omolori has been a member for three years, allowed her to complete the course at Aston University studying international relations. She has since used it to buy a car and to continue saving for a rainy day. 

The way Sani-Omolori’s group operates is simple. Every month, each of its 18 members contributes £500 to the pot. Over 18 months, everyone involved makes the same regular payment. Each month one member collects a lump sum of £9,000 to spend as they see fit. The order of recipients is also decided in advance, which helped Sani-Omolori to schedule her payout for when her tuition fees were due. 

Such schemes, often referred to as rotating savings clubs, have existed in cultures around the world for many years and now offer a tried and tested way to manage money amid a growing cost of living crisis. Owing to their interest-free nature, they are also popular among Muslim communities in the UK. The groups are largely used and run by women, both in their countries of origin and in the UK. Sani-Omolori, who is of Nigerian Yoruba heritage, refers to the system as ajo; in the Somali community it is known as ayuuto; and within some South Asian groups the practice is called kameti. 

Within the UK Caribbean community, where such schemes are known as pardner savings groups, this model of saving and lending offered a way to overcome the financial exclusion many new immigrants experienced when they arrived as part of the Windrush Generation. 

Today, members of ethnic minorities still have limited access to financial services. According to a 2020 report by NatWest, people from Black African and Black Caribbean groups are respectively four times and 3.5 times more likely to be denied a loan than their white counterparts. 

Minority ethnic communities also have lower levels of savings and assets than white British communities. A 2020 report by the Runnymede Trust shows that for every £1 of white British wealth, Pakistani households have around 50p, Black Caribbean around 20p, and Black African and Bangladeshi roughly 10p. 

“I really like the culture and community feeling of doing ajo,” Sani-Omolori says. “I do mine with my best friend’s mum. She has been running this for over 20 years.”

I joined this particular group because when I looked at my friend and her family’s financial situation, none of them took out student loans, thanks to ajo.’

That same idea of community organising motivates Dr Hadiza Kere Abdulrahman to take part in a savings group. Kere Abdulrahman, a 49-year-old senior lecturer in inclusive education at the University of Lincoln, has been involved with multiple savings groups, known as adashi in her northern Nigerian community, for the past 23 years. Alongside a regular savings account with her bank, she uses adashi to discipline herself to save and to regularly receive a cash payout. With her 50th birthday approaching, she has scheduled her collection date for a few months before, so she can truly celebrate. 

Just like Sani-Omolori, Kere Abdulrahman pays a monthly sum to the designated collector, known as an uwar adashi, who organises the distribution of a lump sum to a given group member every month. While most money circles are usually done with the full knowledge of who is involved, Kere Abdulrahman has no idea how many people or exactly who is involved in her group. 

“I’ve been doing this particular adashi for the past 10 years and our uwar adashi really values privacy,” she says. “This is the only one I’ve participated in where it’s been really private. With time, I’ve come to appreciate it because it’s nobody’s business what you’re doing with your money.”

A degree of distrust in the mainstream banking system exists among some participants of such savings schemes, according to Sani-Omolori. Her group operates in cash only and is mostly made up of older Somali women who fear they may be asked by banks about large transactions and deposits into their accounts, as most of them don’t work. 

Manchester-based Fatima Dambam’s bank wanted to know the exact source of a number of large adashi payments. The 25-year-old found adashi an effective way to help save for a deposit on a flat, but ran into some challenges during finance checks she went through as part of the property-buying process.

“It was hard to explain to mortgage advisers and solicitors where this chunk of money going into my bank account came from,” she says. “I just had to say it was from a family member or a friend. I think that’s the only issue when it comes to adashi, especially if you’re doing it with a large amount.”

Informal savings schemes also come with a number of built-in risks. Participants are under no obligation, other than a moral one, to continue paying into them once they’ve received their allocation. There is also always the chance that organisers could abscond with all the money collected. 

“I did adashi with a group and there was a delay in payment once. We managed to sort it out, but I would be reluctant to do it with that person again,” says Kere Abdulrahman. “I also did another one with members of a Facebook group I set up. There were 20 people and one lady defaulted. We later learnt that she was actually very dubious with money. We never did it again as a group.”

Making sure you have the disposable income to participate in these schemes is another important consideration, Sani-Omolori explains. 

“The first time I did ajo, I didn’t have the disposable income to comfortably participate, so I accumulated so much debt that by the time I collected my share, I just used the money to offset the debt,” she says. “You have to really understand that once you start, that’s it. You have to do it with people you trust, otherwise you get a bad name.”

A spokesperson for the Financial Services Compensation Scheme (FSCS) said: “I can confirm that rotating savings and credit associations are unregulated and, as such, are not eligible for FSCS protection. This means if they went out of business or something went wrong, FSCS would not be able to step in and pay compensation to cover the lost money.”

Regardless of the hazards, all three women interviewed for this article have had a predominantly smooth-sailing experience with their savings groups. While participants often have different reasons for using such schemes, mutual trust between everyone involved is vital. 

“The main thing is not really for us to know the other people involved; it’s the fact that we trust our uwar adashi,” says Kere Abdulrahman of her group. “She is the centre point. What she’s done is to vouch for everyone. If you’re bringing someone in, you’re vouching for that person. You’re their guarantor.”

As for Dambam, the friend who organised her group developed a screening process for members. 

“There were certain criteria for you to join the group, like you couldn’t be a student, you had to be earning a certain amount, and you had to make sure that you were comfortable putting in a certain amount of money every month,” she says. “After all the individual screening, the group boiled down to 10 people and we then agreed on a set amount of £100 a month.”

With such measures in place, savings groups offer many women independence and a way to manage finances and support their families in a manner that aligns with their faith and culture. 

“These are people who are predominantly migrants because of war in their country,” Sani-Omolori says of the members of her group. “They’ve managed to put their children through university, they’ve renovated their homes, and they’ve bought houses back home. They live very well.”

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