The Informal Saving Culture of ADAKO

The Informal Saving Culture of ADAKO

ADAKO is literally translated to “Save and Pack”.

This illustrates a saving culture where savers (mostly women) are in a self-selected group. Each member of the group saves an agreed amount periodically based on agreement and the sum total of the savings is handed over to each member in turns to the last member.

The approach is simple and effective when every member of the group knows each other.

The selection of members is mostly single-handedly done by the initiator who also takes up the leadership role in the group. Some of his/her responsibilities are to ensure that every member pays their contribution timely, and the sum total is given to each member in turns promptly.

The leader (mostly semi-literate or literate) is usually at liberty to assign ‘collection numbers’ to the members in the first cycle of ADAKO, but members may demand an open and fair process in assigning ‘collection numbers’ in subsequent cycles.

Despite the advent of microfinancing institutions in Nigeria, ADAKO is still thriving and it is now common in small offices.

ADAKO does not involve paying of interest but the leader of the group may sometimes be compensated with a token by all members at different times as they collect the contribution in turns.

This system of saving culture is overdue for automation and probably be part of banks’ offerings to its customers.

Fintechs are encouraged to also look into this direction. The system architecture can be created and a solution developed to automate the processes involved.

Let us bring this category of people using ADAKO as a means of meeting their financial needs under the formal financial sector.

This is achievable.

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