The Iddir: A burial savings group for Ethiopian Taxi Drivers
Part 1 of a two-part series on Ethiopian mutual aid associations. Click here to download the full paper from which these entries are drawn.
For generations, communities in Ethiopia have managed their financial needs and life risks through informal mutual aid associations. The most prominent of these associations include the iddir, an emergency and funeral insurance group, and the iquub, a rotating savings and credit association (ROSCA). Within Ethiopia, these groups vary in structure, size, purpose, and procedures yet some common characteristics exist. In essence, the iddir is a type of insurance program run by a community or group to meet emergency situations, primarily funerals. The iquub is a community or group association that collects a fixed amount of money from each participant and then provides a lump sum to one of the participants on a rotating basis. In both associations, group members are often joined together by some commonality such as neighborhood, religious institution, or workplace.
Remarkably, Ethiopian immigrants have adapted these traditional financial tools to their new lives in host countries around the world. In this blog, I examine the use of iddir among Ethiopian immigrant taxi drivers in the Boston area. Specifically, I address the group’s objectives and operations, the motivations of participants, benefits provided by the group, and how the group’s model varies from traditional models in Ethiopia. The information provided in the blog is based on a face-to-face interview I conducted with Solomon (name changed to protect subject’s anonymity), a member of the Ethiopian taxi driver’s iddir. This blog is part of larger research I conducted on informal savings groups among Ethiopian taxi drivers in the Boston area.
This research was motivated by an interest to understand the role of informal financial savings groups in the lives of Ethiopian immigrants. Having grown up in the Ethiopian-American community, I was aware of the existence of various community organizations such as the iddir. However, it was not until studying microfinance that I realized this was common practice in societies around the world. Moreover, I had never really thought of these groups as financial tools but rather as social networks. Spending last summer in Ethiopia, interning at an NGO with a predominantly Ethiopian staff, I further realized how deeply and prominently mutual aid associations shape Ethiopian life. Nearly all my colleagues were involved in some kind of community savings group, if not multiple. As a collectivist culture with limited social protection provided by the state, community savings and insurance groups seem to fit well within the Ethiopian context. But why do such informal financial groups persist once people leave Ethiopia? Particularly, what advantage do they serve in the context of advanced industrial societies where formal financial institutions and social safety nets are more accessible? Do these groups serve as a way of strengthening social capital amongst Ethiopian immigrants or is their purpose primarily financial? My research reveals that these groups have both strong financial and social functions.
Solomon is the chairman of the iddir among Ethiopian taxi drivers, officially called the Ethiopian Taxi Driver’s Funeral Association (name changed to protect group members’ anonymity). Now in his mid 50’s, Solomon arrived to Boston in 1985 to continue his studies at a local university. As a student, Solomon drove a taxi on the side and upon graduating started work full time as an engineer. After working as an engineer for nearly a decade and tired of his regimented work life, Solomon went back to taxi driving.
When Solomon first started driving a cab in the mid 80’s, he was not aware of an iddir among Ethiopian taxi drivers. In 2008, after the death of a fellow Ethiopian taxi driver, Solomon and five other drivers discussed the idea of starting an iddir amongst each other. This decision was provoked by witnessing the struggles that the deceased taxi driver’s family endured in paying for his funeral expenses. Given the elaborate nature of Ethiopian funerals as well as the custom for the dead to have their bodies sent back to Ethiopia for burial, funeral related costs can be exorbitant.
In Ethiopian tradition, the mourning period, known as lekso, takes place on average for three to four days but can sometimes last weeks. During this time, relatives, community members and old friends from across the country gather at the home of the deceased and “sit” with the relatives of the deceased for days at a time as a way of showing respect. Relatives of the deceased are expected to host lekso, which consists of providing traditional food, snacks, and drinks and renting chairs and sometimes a tent. Amongst those who knew the deceased or the family of the deceased, not showing up for lekso is considered a great sign of disrespect and can lead to breaches of kinship. Therefore, it is not uncommon for over 100 people to participate in lekso. According to Solomon, the cost of lekso can range from $500 to $2000.
In addition to the lekso, there is the cost of the actual funeral. Among the Ethiopian community, it is common to send the body of the deceased back to Ethiopia for burial, particularly if the deceased were born in Ethiopia and have a significant amount of family still living there. In many cases, people are also buried in the United States. The costs associated with holding a funeral in the US include both the costs of the funeral home services and the cost of hosting a lunch for funeral attendees, which usually takes place at a hall and can include hundreds of guests. According to Solomon, the cost of funeral expenses for either sending the body back to Ethiopia or for holding a funeral in the United States, average to about the same amount of $10,000.
Structure and Operation
When I asked Solomon how he knew how to establish an iddir, he explained that almost everyone who had been raised in Ethiopia had been involved in an iddir in some way throughout their lives. In his case, his parents had been involved in a neighborhood iddir. He noted that in Ethiopia, joining the neighborhood iddir was expected of people and was understood as the community’s way of collectively managing risk against emergencies.
The Ethiopian Taxi Driver’s Funeral Association is a registered non-profit organization and adheres to a formal structure and strict by-laws. As written in the by-laws, the main purpose of the organization is to fund emergencies related to death, which primarily means funeral related expenses, but can also include sickness. Membership is exclusive to Ethiopian taxi drivers, and a hackney (taxi) license is required for entry into the group. The group is explicitly non-political and non-religious in affiliation. The basic requirement for members is a monthly contribution of $30. With approximately 100 people currently in the group, this averages to $3000 per month for a total of $36,000 annually. The leadership consists of an executive committee consisting of four officers—a Chairman, Secretary, Treasurer and Auditor—and three members that oversee the association’s management in conjunction with the officers. Despite the overall formal structure of the organization, the system for collecting deposits is rather fluid. Members are required to simply give their contribution to members of the executive committee before the end of the month, which normally happens through casual run-ins on the taxi route. Solomon explained that this system works rather efficiently and it has not been necessary to hold organization wide meetings every month. Moreover, in place of monthly meetings, the executive committee maintains regular communication with association members through an email list serve. Upon handing their money to an executive committee member, members are issued an official receipt of deposit. Once the money is collected by committee members, it is given to the treasurer, who then deposits it in the organization’s bank account. The treasurer also keeps track of all transactions through a bookkeeping system, which is overseen by the auditor.
The executive committee meets once a month to discuss group operations and to decide on the use of funds when a crisis emerges (decisions are taken in accordance with the by-laws). These meetings are strictly association focused and take place for no more than one hour, usually during a lunch break. When a decision is made to dedicate funds for a particular emergency, money can only be withdrawn from the bank with the signatures of the chairman, treasurer and secretary. According to the by-laws, funds can be used for all matters related to death and serious illness. Benefits extend to members’ spouses and children under 18. While I did not see the by-laws, Solomon explained that there are set amounts allocated for specific situations. For instance, $500 is allocated for lekso while $10,000 is allowed for funeral expenses (either the cost of holding funeral services or sending the body to Ethiopia). In cases where the body is sent to Ethiopia, the $10,000 is used towards the cost of sending the body, holding funeral services in Ethiopia, and other incidentals. In one case, iddir funds were not only used to send the body of a deceased female taxi driver to Ethiopia but also to buy her sister a plane ticket to Ethiopia. While the usual sum of $10,000 covers most funeral related expenses, the iddir does not cover the cost of a tombstone. In the event of serious illness, members are allocated a certain amount to cover any expenses not covered by health insurance or to supplement for income lost from work; this amount is determined by the executive committee on a case by case basis.
In addition to financial assistance, the Ethiopian Taxi Driver’s Funeral Association provides other services to family members of the deceased. In the event of a group member’s death, the iddir plays a key role in facilitating all tasks related to the lekso and funeral arrangements. Immediately after the death, the executive committee meets to divide the various tasks among group members. These tasks range from coordinating with the funeral home and making arrangements to have the body sent back, to figuring out who will pick up food and rental chairs for the lekso. During the lekso, group members take the lead in distributing bread and drinks to attendees. Moreover, Solomon explained that the wives of taxi drivers (most members of the association are men) are expected to assist with preparing food for the lekso and funeral lunch. Additionally, at the funeral services iddir members usually serve as pallbearers. According to Solomon, such services are a way of offering the family moral support and showing that the community is behind them during their time of need.
Benefits of Participation
Based on my interview with Solomon, the benefits of participating in the iddir seem to be fairly obvious. It is an efficient way to insure against future emergencies, particularly death related expenses, and involves very little commitment (of both time and money) and low transaction costs. Moreover, given that many Ethiopians are accustomed to the concept of an iddir and community based mutual aid associations, it was not a tool that needed much explanation or a trial and adjustment period. According to Solomon, in the early stages of the group formation, everyone easily recognized the need for the iddir and accepted the rules without much objection or difficulty. Although late deposits are penalized with a $5 fee, Solomon said late deposits rarely occur. The organization seems to run fairly seamlessly.
I started this research curious to understand if the iddir could be thought of as an alternative to formal financial tools offered in the United States. In particular, I wanted to know if the iddir was providing a similar service to a formal tool that was inaccessible or unattractive to Ethiopian immigrants. When I asked Solomon if the iddir was a substitute for formal financial tools, he was quick to suggest that most Americans do not have burial insurance. While it was difficult to find data verifying Solomon’s suggestion, approximately only 44% percent of Americans have life insurance, which can include burial insurance (data from http://goo.gl/iGkam). From this perspective, it seems that members of the Ethiopian Taxi Driver’s Funeral Association are not outside of the norm. As formal life and/or burial insurance seems to be inaccessible (or unattractive) to most Americans, it seems strange to discuss the iddir as an alternative to a formal financial tool or to suggest that its members are somehow uniquely excluded from the formal sector, as a viable formal option does not seem to exist for most Americans. Moreover, Solomon explained that everyone in the group has formal bank accounts, which suggests that members are not isolated from formal financial systems. Rather than serving as a substitute for a formal tool (life or burial insurance), the iddir seems to offer a service that group members see as missing from the formal sector.
To a smaller degree, the iddir seems to offer social benefits to group members. When I asked him about the social benefits of the group, Solomon took pride in telling me that iddir members were providing “great community work.” As a member of iddir, should you pass away or experience a death in your family, you have the assurance that your family will not only receive financial support but also assistance with all logistical aspects of the funeral services as well as moral support from the iddir group. This seems to be a powerful social benefit given that most Ethiopian immigrant families lack the same type of extended family and community support that they once had in Ethiopia. Solomon also mentioned that iddir members get special recognition by the priest and other community leaders during funeral services.
As a community based association, group solidarity also plays a role in the advantages offered by the Ethiopian Taxi Driver’s Association. Within the group, there are cohorts of members who are close friends. In one example Solomon shared, a taxi driver fell seriously ill two months after joining the group. Although he had been part of the iddir for a short time, Solomon said he was still seen as a member of the association. Group members visited him during his hospitalization and offered moral support to the family. In addition, a core group of his friends continued to pay his contribution to the iddir in his absence. A few months later, when the taxi driver passed away, iddir funds were used to pay for his funeral.
Amongst Ethiopian communities, both within Ethiopia and abroad, informal savings groups play a significant role in generating social capital and providing unique financial tools. Within Ethiopia, community savings groups provide a way to strengthen social ties, cope with emergencies, and overcome the limitations of formal financial institutions. These groups provide a similar function among Ethiopian immigrants within the United States. From the financial perspective, the iddir offers Ethiopian taxi drivers a superior financial product than those offered in the formal banking system. Moreover, this tool provides them with the additional benefit of community support.
Elizabeth Mengesha is a recent graduate of the Fletcher School of Law and Diplomacy. She holds a Master of Arts in Law and Diplomacy with concentrations in human security and international development.
Reader Comments (3)
Warm greetings 2 u all.
Who am I?
Click here: http://www.internationalcitiesofpeace.org/cities/toronto/toronto.html
I was Ye Iddir Dagna (Chairman of Iddir) of Sefere Guenet in Mekanissa and Dejach Wubie Sefer in Addis of Ethiopia as well as "Samuel Bete’s Memorial Iddir" of Calgary, Canada.
Having graduated in MA Degree from the United Nations University for Peace in Peace Education, now, I am a CEO of a Peace Foundation here in Toronto Canada.
The Peace Foundation Underpins Iddir as a core element in building a Culture of Peace from the bottom-up. The Foundation has defined it in its Bylaws as follows:
"Iddir is the ancient Ethiopian Cultural Heritage for a culture of mutual help"
We Ethiopians by birth do have a lot to share to the world which lacks "Mutual help."
Let us make "Iddir” part of the Global Movement for a Culture of Peace.
Thank you Elizabeth and the moderator!!
I am from the land of the Smiling Faces.
Sun, August 18, 2013 | Assefa Teferi
Thanks for that! Glad to hear from the land of Smiling Faces!
Good luck to you, and to the Foundation. Let's stay in touch.
Sun, August 18, 2013 | Paul Rippey
The fixed price funerals helps the common people to handle the sorrowful situation.
Fri, September 12, 2014 | Colin Brown