ASCA vs ROSCA: What happens when experts try to form their own savings group?

ASCA vs ROSCA: What happens when experts try to form their own savings group?

The Kenya Financial Diaries project is tracking 300 Kenyan families’ comprehensive cash flows for an entire year.  After studying up on informal financial management practices and observing many unique arrangements in the field, the research team decided they wanted their own savings group.  The majority of team members opted for the ROSCA option, sending each month’s recipient Ksh 5000 over M-PESA at the end of every month.  And months later, a considered, but lighthearted debate over the relative merits of each rages on.  The email string below was initiated by field researcher, Perez Otonde, based in Western Kenya, where ASCAs trained by CARE are quite prevalent.  


Perez Otonde, Western Kenya:

Dear Good People, 

I have been asking myself why you’ve chosen a ROSCA over her sister ASCA.  Can someone in the group whisper to me the goodies I could be missing out on?  Hmmmm!

Why do you prefer using this informal way other than keeping your money individually in a formal set up like Jijenge? [Jijenge is a commitment savings product recently reintroduced by Equity Bank.]

Besides, I believe you are incurring some costs transferring your contributions to payout recipients each month.  All of those fees amount to approximately Ksh 660 per year that you could have otherwise contributed as shares in an ASCA.

Here is why I still think ASCA is a better option:

  1. In case of an emergency you can access loans (your money) in proportion to your savings (risk checking). 
  2. You keep saving and putting your savings to use, actually making your money work for you just by borrowing it!

And, you may add to the list…

With these GOOD reasons, I hope just one more person can join me for ASCA :-)

This is just how my respondents’ lives have been changed by ASCA:

  • Moneylender: Belongs to three very strong ASCAs where she borrows money at 10% interest to lend out at 20-30%, thus earning triple!
  • Security: Through the ASCA, a group of business people were able to construct houses for the administrative police in the community, giving the government a reason to deploy security personnel. 
  • Members keep saving, borrowing and earning profits on their money. For example, one respondent is expecting Ksh 35,000 at the end of the year when sharing the pot. Her current balance is Ksh 32,000.  Her estimated profit is Ksh 3000!  No ROSCA earns that kind of money!
  • Education: Parents pay school fees for their children. In case of them being sent home when there is no money, the ASCA saves the day by giving small loans to keep them in school.
  • Emergency bills: Members can access small loans to pay hospital bills for their loved ones where there is no insurance.
  • Dowry: A lady accessed the loan from her group on behalf of her husband to give a token of appreciation to the lady’s parents, making the family happier and tightening the relationships.

Just Some food for thought!

Keep it fun! Cheers!

Perez Otonde


Catherine Wanjala, Western Kenya: 

What I have gathered is that most ASCAs started out as ROSCAs with few people. This later grows as more and more people join. As the ROSCA stabilizes with the number of members willing to go to the next rounds becoming consistent, they start coming up with new ideas of development. This is where the ASCA comes in, and that’s why you will find that most groups have both.

With this observation, Perez, you should join our ROSCA!  Besides, we need to develop trust amongst the members, lest you recruit a conman/conwoman!

Nekesa Wekesa, Coast

I concur with Catherine, members must build trust first before embarking on an ASCA.  Perez, show us first that you are a good contributor while in a ROSCA, then you will be trusted with an ASCA.

Besides most forms or all forms of savings have some expenses, even if you save in an ASCA you will still be charged a withdrawal fee, be it in a bank, M-PESA, or MFI.  Or else you risk saving in one of the member’s houses and then they disappear with the money.

So, ASCAs are best with people who know each other perfectly well but with us we are still strangers to each other when it comes to money matters. 

With those few remarks, just join a ROSCA and achieve the same dream that is saving money.


Hildah Ogeto, Nairobi


I totally 3rd Nekesa and Catherine.  Imagine you putting your money in pyramid scheme.

  1. Do you know the people who save there?
  2. Do you know their aim?
  3. Do you share the same ideology?
  4. What guarantees that you can get back your money/ savings in this scenario?
  5. Where is the money kept especially in your setup?

Talking of unnecessary expenses in a ROSCA think of the expenses your respondents have been incurring in an ASCA during group meetings, especially the seat fee [fee to rent a plastic seat for the duration of the meeting] and the group meals when they meet. And yet, in our ROSCA we only spend 30 to send the money. 

There is also another issue, of gossip in ASCAs whereby members start comparing each other in terms of development.  Women in the group start getting jealous of the assets owned by other members when they see they have those things in their house. 

There is no success in any endeavor without taking reasonable risks. Ask about the benefits of a ROSCA before jumping to conclusions.  Engage ROSCA professionals and those who have been part of this activity.

Speaking of the goodies, it’s all the same because in the ROSCA you can get the money based on need.  Members understand in the case of school fees, dowry, medical bills and any emergencies and you can move your turn with agreement of the others. 

Perez gal, If you can’t beat them please do join them. As you can see the list is endless. You are welcome join us and get to know what makes us tick more in a ROSCA.

There is no difference between an ASCA and a pyramid Scheme, unless you built trust with the members and this cannot be built overnight.


Perez, Western 

Thanks, but I’m not yet convinced! 

In fact, it is in ROSCAs that if a member defaults, the others risk losing more with really no fall back plan to recover the lost money!  Here’s what I learnt today from the chairperson of a very strong ASCA: 

She belongs to 8 ROSCAs and only 2 ASCAs.  In one of the ROSCAs where they are 12 members and contribute 1000 monthly, she did not receive 6000 in her turn (which was no. 11) in June.  To date the group has never met, members keep excusing themselves for this or that commitment and the last person in the round to receive her payout has lost hope of ever recovering her money that she faithfully contributed.  Remember, this group has existed for more than 3yrs and this only happened this time round.

My respondent says that if it were a ROSCA and ASCA in one, they would have recovered some money from members’ shares, but unfortunately it is only a ROSCA.  So Cate, ROSCAs are more risky! And yes, they co-exist with ASCAs in many instances. But ASCAs are more profitable, just see how below.

When asked about how much she was expecting this year when sharing her ASCA pot she said, “Teacher, I’m expecting a lot of money from there, around 70,000!”  I was a little perplexed and asked again, how is that possible from your little savings?

“You know, our business in the ASCA is to make money by putting it to use.  When I save 1000 at the beginning of the round, I am sure at the end of the year I can have 3400, the 2400 being interest earned.  My current shares are 7500, which will earn me 18,000 by the time we are sharing the pot.  If I increase my shares, to 10000, the next 6 months will earn me 12,000, but because I have a double membership, with equal shares for each, I can be sure of my 70,000 come March 2013.  I will then buy a piece of land for my family’s home.”

Prompting me to ask the very itching question…”How sure are you that you will get all this money when the time comes? Won’t you be disappointed like it happened in the other ROSCA?”

“Heeeee! Teacher, this money can’t get lost that easily. Besides, members are loaned money at a percentage of their shares, so if they do not repay the original amount, at least the interest that they have been paying monthly together with their shares would always be enough to cover that loan.  

“Yes, we keep the money at the treasurer’s house in the month prior to sharing the pot contents. But, it is in a three-lock money box, and the key to each lock is kept by different members. Whereas the records are also in triplicate and kept by three different members. It would therefore not be easy to access the money by a few individuals!”

This assures you of some safety Lilyan, should the money be kept in someone’s home.

If I put 30k in an ASCA tomorrow, in 2013 I should be banking at least 102k! Money that would have taken me 12 months each of sacrificing 10k from my hard earned salary!

Faulu na ASCA! (Succeed with ASCA!)


Nekesa Wekesa, Coast

Why then is that chairlady in 8 ROSCAs and only 2 ASCAs?  That gives you your answer.  Even after that incident, her heart and trust are still with ROSCAs.

One more thing each type of saving has its risks and anything can happen even banks collapse with people’s money in them. 

Just move to ROSCA then later join ASCA.



My respondents belong to so many ROSCAs in order to save so much! More so, because it disciplines them to save consistently, because of the commitment (or is it coercion?) bit.  In these ROSCAs they save 100, 500 or 1000 and they are usually a small group in multiples of 6. Where there are 8 or 10 members, a member chooses to contribute a double share, so that she/he would have two turns of payout and make the cycle last 12months.  Where a group consists of, say 22 members, they have two payouts in a month or divide the monthly collection between two members.  With this, one does not really expect much, giving them a reason to belong to several groups with small payouts.

The chairlady I told you about does not need to belong to several ASCAs, because the more shares she has in one, the more interest she earns, and the easier it is for her to get instant loans of a desirable amount.

Hildah, if I lent you 30k at 20% monthly interest, I would be more of a shylock than pyramid scheme.  This is what happens in ASCAs.  ASCAs are collections of ‘Shylocks’ making money by lending out to each other from a collective pot, which is a win-win situation. Don’t you think so?

Who has more sense of financial independence, a ‘shylock’ or a ‘coerced saver’?


The Kenya Financial Diaries are sponsored by FSD Kenya and the Bill & Melinda Gates Foundation and implemented by Digital Divide Data and Bankable Frontier Associates.  


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Reader Comments (4)

Am keenly looking at the views presented and am still seeing a weak link with the ASCA.
For one, am not seeing the logic of the math presented by Perez. Gal, u need to share on the growth of those savings since they have grown by 3.4 times the principal amount??.... At that rate, all the mamas in the villages would millionares by now!
Secondly, I have discovered from the much I have learnt so far that the annual shareouts do not really happen. Why?
- Coz the monies are almost never really there. When dealing with huge amounts, most ASCAs divert to bank saving for safety reasons thus beating the logic of village saving. At the banks which mostly are MFIs, the members are never allowed to make withdrawals on their savings unless quiting the ASCA. 
- Most people that save in ASCAs do it for the benefit of getting a loan. The loan is given at a rate of up to three times your savings which means that if am a small time contributer 100 bob per weekly meeting, it would take me 17.5 months to accumulate 7000 bob. This saving would only allow me a loan of 21,000 bob.???....!! If it is charged at a 20% inteest rate; it would, mean I have to pay 2,100 bob monthly contribution for twelve months just to clear it.
- Now take the same scenerio in a ROSCA. We are 10 in tne group contributing 100 bob per week and giving it to a member. This means, each member goes home with 4,000 bob; and it take 2.5 months for us to start the process again. At 17.5 months, we would have done 7 rounds which translates to an accumulated saving of 28,000 bob!! At the end of the 12 months that my ASCA counter part is paying off a 21,000 bob debt, I would have accumulated another saving of 19,200 bob. 
My ASCA counter part on the other hand is at 7000 BOB!! (All factors remaining constant)

Perez, have I convinced you?

Sun, October 21, 2012 | Abbie Coast

Sorry, I meant to write in the ROSCA contributing 400 bob per week where each 100 bob accounts for the 4 accounts in the ASCA group!

Sun, October 21, 2012 | Abbie coast

I'd love to know if the ASCA people have a ceremonial blue box with three keys (see earlier post). Joking aside, this is a fascinating discussion. If possible, let us keep it going. I rarely hear of such passion in the US for different types of savings products. This conversation brings life to financial inclusion. October 31 is World Savings Day and maybe we can post another round.

Mon, October 22, 2012 | Kim Wilson

Perez i think between a "Shylock" and a "coerced saver" in terms of who has more sense regarding financial independence i will say none has, why?

Financial independence is a term generally used to describe the state of having sufficient personal wealth which may not be the case with the two.
One can easily be a "Shylock" without sufficient money he/she can even take loans from family and friends in order for him/her to make that extra coin as a way of earning a living, hence most of them are not financial independent. A good example has just been brought by you where you say "ASCAs are collections of ‘Shylock’ making money by lending out to each other from a collective pot, " that money is not theirs alone.
This might also apply to a "coerced saver" my thought , if one is a "coerced saver" how can they have financial independence? thus confirming my assumption that none has more sense than the other.

What comes out clearly in both of them is that they are all saving money for a specific purpose.

As i go through the thread i can easily see the reason why some of you respondents have many ROSCAs compared to ASCAs.

1. ROSCAs are basic and simple to manage unlike ASCAs

2.In a ROSCA one has a sense of affiliation, identification e.t.c which is not the case in an ASCA.

3.Saving of money in a ROSCA is transformed instantaneously to the recipient unlike in ASCAs where you have middlemen as one of you respondent says “Yes, we keep the money at the treasurer’s house in the month prior to sharing the pot contents. But, it is in a three-lock money box, and the key to each lock is kept by different members."

4.In a ROSCA there is less documentation which is not the case with ASCA where bookkeeping has to be done." Whereas the records are also in triplicate and kept by three different members." as one of you respondent puts it.

5.ROSCA has regularity of contributions thus no risk of misappropriation unlike in ASCAs whereby others saves while other borrow which might lead to misappropriation.

6.Many ROSCAs are formed by relatively small groups of individual a very practical example is our ROSCA we decided to divide ours into two.which is not mainly the case with the ASCAs.

7. Problematic participants can easily be eliminated in a ROSCA which might take quite a while in an ASCA.


It is not too late you can still join the ROSCA.

Tue, October 23, 2012 | Anne Gachoka

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