Diffusion - Why ROSCAs Best ASCAs

Diffusion - Why ROSCAs Best ASCAs

How do good ideas spread? A popular notion is that good ideas “sell themselves”, yet many brilliant innovations lie dormant for years, decades, even centuries before becoming adopted. Take the cure for scurvy for instance. It was discovered in a control trial in 1601, yet the British Navy did not incorporate citrus juice as a preventive care for another 150 years. Good ideas, it seems, do not always sell themselves.

What does all this have to do with savings groups? For starters much of the sector has internalized the belief that savings groups will quickly spread meme-like throughout a population. In most places, that is not happening, at least not without a great deal of subsidy. Why the slow take-up?

To find our answer, let’s turn to a famous anthropologist, Everett Rodgers, an expert on how new ideas spread. He has been studying diffusion since the 1950s. Below, I have summarized his insights and have graded ASCAs and ROSCAs accordingly. Since I use a curved grading system, one or the other – an ASCA or a ROSCA - gets an A.

The Principle of Relative Advantage. How is the innovation comparatively better to other practices? Economic factors are one consideration but so too are others such as convenience and prestige.

Savings group grade: “A” If a ROSCA gets a B (it is better than saving alone and still convenient) then an ASCA gets an A. While ASCA meetings take longer than ROSCA exchanges, ASCAs allow users more flexible access to lump sums.

The Principle of Compatibility. How is the innovation compatible with existing values? If it deviates considerably, its adoption is less likely.

Savings groups grade: “A” Except for those approaches that are now bundling in market incentives to create sustainability, savings groups in parts of Africa and Asia seem compatible with existing values of community. Market incentives may actually conflict with social values. ROSCAs get a B.

The Principle of Complexity. Is the innovation easy or difficult to understand? The more intuitive it is, the faster it can be communicated and adopted.

Savings Group grade: “C” ASCAs are far more complex to manage than ROSCAs. Those that involve share-outs are particularly complex. ROSCAs in contrast get an A. They are simple structures.

The Principle of Trialability. To what degree might a user experiment with the innovation on a limited basis? Must the user convert her practice entirely to the new practice, or can she attempt small trials on a piecemeal basis? The more a user can experiment bit by bit, the more likely she can “learn by doing”, and thus absorb the innovation.

Savings Group grade: “C” It is hard to leave a savings group other than at the time of share-out, which is not very often. Most savings group cycles last a year. In contrast, a ROSCA can be formed with just a few people and  their cycles completed as quickly or as slowly as local rules allow. ROSCAs are far more “trialable” than ASCAs.

The Principle of Observability. Is the innovation easily visible to others? If so, it will stimulate peer discussion, intensified information exchange, and thus diffusion and adoption.

Savings Group grade: “A” Savings groups can be easily observed. So can ROSCAs, and thus both get an A. And both likely are more observable than the hidden lump in the mattress or the inscrutable account in the bank.

So how do ASCAs compare to ROSCAs on their capacity for adoption?

The tally for final grades of ASCAs vs ROSCA has ROSCAs wining with an A- over the ASCAs B-. What can promoters of savings groups do to match the performance of ROSCAs? Stay tuned.

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