Street bankers of Benin
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CTA. 1997. Street bankers of Benin. Spore 71. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/48849
On market days in the villages of Benin, travelling bankers criss-cross the roads and alleyways to meet their many and varied clients. Tens of thousands of people entrust small amounts of money to these street bankers and then claim back their...
On market days in the villages of Benin, travelling bankers criss-cross the roads and alleyways to meet their many and varied clients. Tens of thousands of people entrust small amounts of money to these street bankers and then claim back their savings at the end of the month. As well as offering the services of a savings bank, these itinerant bankers may also provide credit. This form of financial service supports a myriad of commercial activities and may represent for the customers concerned the only means of getting access to banking services. The Beninois travelling bankers devise snappy names for their businesses to attract clients, and there are now approximately 440 of them involved in the business. They can also be found in Togo but numbers are much lower. According to Makarami Adéchoubou, author of a study on the subject undertaken by IRAM (Institut de recherches et d'applications des méthodes de développement), some people include these travelling bankers within the larger classification of `tontines' (a special form of savings group). In fact, they differ markedly in that there is no social activity involved and no group solidarity or self-support. There is simply a personal arrangement between the banker and his clients. This type of travelling banker first appeared during the 1920s. Most belonged either to the Yoruba or Nagot ethnic groups. Now, however, many traders and unemployed diploma holders are keen to imitate these resourceful bankers, of whom the most successful can earn as much as 100,000 FCFA per month, and they are no longer restricted to any particular ethnic group. On their mopeds or motorbikes, the travelling bankers go up and down the market alleyways and into the local neighbourhoods to meet their clients who, for the most part, are acquaintances, friends or relations. The most important characteristic required of these financiers is that they should have a reputation for honesty since they could, in theory, make off at any time with other people's savings. On the whole these arrangements based on trust work well, and there is little evidence of conflict; disputes, when they do arise, they are usually resolved amicably. Some prudent savers divide their savings contributions between several bankers or keep some money under guard. As Makarami Adéchoubou explains, the system is simple. The most usual method is to hand over a card which carries the name, address and sometimes the photograph of the banker and which bas 31 separate boxes relating to the days of the month. Client and banker agree on a daily amount to be paid in as savings. At the end of the month, the banker returns the amount contributed, less a charge for the service of about 3% per month. Savings are deposited once or twice a week, usually corresponding to market days, but can be spread out over a longer period. Minimum amounts are between 20 - 50 FCFA but the amount usually deposited is between 100-1,000 FCFA or even more. In the past, travelling bankers restricted their activities to savings but they are now also providing credit services. To long-standing and reliable clients they will often allow a loan for a period longer than 30 days and with the level of interest payment varying between 5% and 20% per month. Makarami Adéchoubou emphasizes that this is a more complex transaction and requires good management and proper funding so that deposits from savers can be used as an advance to creditors. In fact, the travelling bankers are used to managing this type of transaction because many of their traditional savers require an advance before the end of the month. Small loans but a big help A banker may have between 100 and 300 clients from many different walks of life. Eighty per cent of customers are likely to be women or others who do not have access to formal banking services, either because they cannot offer the required guarantees or because the sums involved are too small. Only 11% have a normal bank account as well. Savings or loans are used for buying goods in bulk in order to sell them on in smaller quantities; for buying spare parts in order to repair machinery; for buying perhaps a 20 litre drum of edible oil in order to cook food for sale; or for buying materials for enlarging or diversifying some commercial activity. Taxi drivers will sometimes ask for credit in order to buy fuel. This type of financial service is not suitable for starting up a new business but it does help to keep some trades going and sometimes even allows them to expand. Flexibility and simplicity are the two principal qualities that clients seek from these travelling bankers. From what other banking service could they borrow against a savings scheme, deal in such small sums and arrange payments and withdrawals according to their needs? Transactions can be agreed in less than a minute, require no form-filling and take place on customers' home ground, on days which suit them, and with a banker who is known and trusted. It is because the system is so well adapted to the needs of customers that this type of banking activity, like most informal financial systems in developing countries, is so successful and becoming increasingly popular. The activities of these travelling bankers should not be considered secondary in any way simply because the sums deposited and loaned are small. Even though the amounts are small compared with deposits made to traditional banks, their overall impact is significant. An indication of their importance is that the total amount of savings collected annually by this means is estimated to be in the region of 9 billion FCFA or about 20 million FCFA per banker. Despite this, the travelling bank system is far from being able to meet the country's need for financing economic activity nor is it likely to have a significant impact on development. The activities it supports are simply not sufficiently productive or profitable. Nevertheless, these banking services are essential for thousands of traders and artisans and without them life would be very difficult. Moreover, savings schemes and requests for loans reflect a desire to succeed and a spirit of enterprise. This is emphasized by Makarami Adéchoubou in the conclusion to his study when he points out that customers banking with this system pay a substantial sum to the bankers in the way of charges for the privilege of using this method of saving instead of expecting the banker to pay them interest for his good fortune in being able to hold and use their savings! [caption to illustration] Street bankers establish a contact of trust with their clients and maintain a reputation for honesty and dependability