Paper Title
An Examination of Challenges and Benefits of Rotating Savings and Credit Associations (ROSCAS) in Meeting Financial Needs of Members
Abstract
Rotating Savings and Credit Associations (ROSCAs) are a popular and very informal means of creating saving and credit services to the unbanked, the poor and to some extent the middle class across cultures and jurisdictions since time immemorial. ROASCAs are hardly recognised by the formal institutions more so evidence in having ROSCAs account receivables asset may not be considered as a valuable collateral in the formal financial services institution. Looking at its wider influence and inhibition coupled with the informality befell it, this study decides to re-examine the challenges and benefits of ROSCAs with a view to understanding their effect in satisfying members’ financial needs so that possible improvements could be sought to improve their management and operational status. A survey is conducted on 106 participants and questionnaires were distributed to them through social networks and using jotforms.com platform. ANOVA, Chi square, Shapiro-Wilk tests and descriptive statistics were used to analyse results obtained. It was found that core benefits recognised by members of ROSCAs are significantly saving opportunities, meeting planned needs and sourcing for business capital. On the other hand key challenges identified are delays in collecting period contributions from members and prevalent cases of defaults by members. It is concluded that as ROSCAs have their peculiar benefits and challenges, they can coexist with other formal financial institutions while efforts is to be made to systematically reduce the prevalence of the identified challenges without stringent institutions regulations on them.
Keywords - ROSCAs, Savings, Credit, Informal Financing, Financial Inclusion