Accumulating Savings and Credit Association

Description

1.

Documented extensively in South Asia by Rutherford, ASCAs are also time-limited, informal microfinance groups. Unlike ROSCAs however, they appoint one of their members to manage an internal fund. Records are kept and surplus lent out. After a pre-agreed period (often 6–12 months) all the loans are called back and the fund, plus accumulated profit, is distributed to the members. [1]

2. In Africa (Kenya):

"A longer-term form of Chama in Kenya is organized on the basis of shares, which members buy to gain ownership of a percentage of the chamas investment or income. These organizations are classified as "Accumulating Savings and Credit Associations" (ASCA). This structure is very similar to a unit trust, however the chama leadership is not compensated for managing the fund, other than the profit on their own investment. Members must usually make a monthly commitment of a minimum investment, and bring their cash to the monthly or weekly meetings. The chama leadership invests the pooled funds in a pre-agreed-upon manner. Commonly, the chama will make loans to members at very high interest rates. 20% per month is typical. Chamas are also known to invest in transportation (taxis, matatus, buses), land, rental housing units, agricultural enterprises, as well as stocks, bonds and other financial products." (https://en.wikipedia.org/wiki/Chama_(investment))

More Information

More information via http://en.wikipedia.org/wiki/Rotating_Savings_and_Credit_Association