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What are the problems with traditional eSuSu?

  1. Credit Default: it does not solve the non-payments risk by one or more members. This is an issue that has resulted into failure of the traditional forms.
  2. It is not an investment: It is a pure exchange of cash and does not compensate the participants that receive the pot later in the in revolving circle.
  3. Time value of money: It does not compensate participants for inflation and it does not take into account that as a result of inflation the value of goods and services may cost more in the future.
  4. Payment is an administrative burden and is not automated: The organiser may need to send reminders for money to be sent to an account for disbursement to the next member to receive the pot which introduces administrative burdens and may result into a risk for the group.
  5. Does not meet regulatory compliance: It is informal and as such does not have regulatory approval as default does not have a negative consequence to the defaulter
  6. Does not improve the credit history of participants: Since it is an informal loan it is not reported to the credit bureaus, as such does not help participants to build their credit history
  7. Does not provide access to credit from banks: Participation does not qualify for a bank or cooperative loan
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