Most Canadians have never heard of a Susu, Pardner, Hagbad, Chit Fund, or Tontine, collectively known by their academic name, ROSCA. But that’s about to change. Especially if Dr. Caroline Shenaz Hossein has a say—and the freedom to say it.
For over ten years now, Dr. Hossein, award winning University of Toronto scholar, author, international speaker, and daughter of Caribbean immigrant parents, has been an unstoppable researcher and fiery advocate for the acceptance of ROSCAs as part of our financial system.
Dr Hossein, also a founding member of the Banker Ladies Council, has been holding the torch through her research for over a decade; Illuminating a growing important and misunderstood form of community banking operating in a wide variety of communities across Canada.
Despite efforts by mainstream financial institutions and even Dr. Hossein’s colleagues who try to discredit and discourage ROSCAs, including research in this area, Dr. Hossein believes that ROSCAs time to shine openly has finally arrived. Researchers estimate there are 1,000 or more ROSCAs operating in Canada at any one time.
What is a ROSCA?
ROSCAs (an acronym) which stands for “rotating credit and savings association” are essentially an informal, community organized savings bank.
ROSCAs are formed when people come together and agree to contribute regular amounts at regular intervals, put the money in a bank account—and take turns receiving lump sums from the account based on mutual agreement about distribution between members of the group. Members use the money saved to pay typically for one time, high-cost goods and services they need to survive and thrive. For example, money to pay for university tuition, cover an unforeseen event-based financial crisis in a member’s life, save for a vacation, make a down payment on a house or fund a startup.
In essence, it is an analogue, lo-fi, hi-relational example of crowdfunding, minus the tech, scale and financial extraction that comes with formal expressions of capitalism. Think Bank of Dave (popular movie, 2024) meets collectivism.
How It works
Say you have 10 people you trust and like to hang out with. Each of you has dreams. But you can’t get there alone, or on your own in a timely way. So, you create a 10-member ROSCA contributing $1,000 per month for one year. The initial pool after a year would be $120,000. Depending on the agreed upon ROSCA rules of the group, each member, in turn, would be able to withdraw, for example, $12,000 over the course of the contribution year to fund something important to them at that moment. Working to save this amount on your own would otherwise take a year. ROSCAs members meet regularly to see how things are going. ROSCAs are essentially democratic circles of compassion, care and accountability.
A ROSCA might dissolve after everyone had their turn. Or continue. Their informality means the rules can change as members and needs change.
ROSCAs do more than just facilitate and promote the concept of savings. They also teach self-reliance, the importance of saving, financial responsibility, and positive character development. In these tight-knit groups, personal growth and a sense of community often trumps the financial benefit. ROSCAs contribute significant social benefits and impact to broader society
ROSCAS are most often groups of five-to-20 people but there are as many as 1,000 plus. Someone or some ones are typically elected to be the “banker” for the ROSCA. Sometimes, they are paid a small fee for their administrative work (like banking). Again, that is up to the group.
The legal status and tax status of ROSCAs
ROSCAS are not illegal in Canada—or anywhere else in the world for that matter. In Canada, ROSCA funds received are also not taxable, because the money contributed to ROSCAs by members are seen as after personal financial gifts- just like your grandmother’s birthday cash. Or like money raised via say a Go Fund Me campaign which is also, according to the Canada Revenue Agency, not taxable as income for the same reason.
In many Organization for Economic Co-operation and Development (OECD) countries, ROSCAs are an acknowledged and sometimes a valued and regulated part of the financial system. In India, Chit funds (ROSCAs) are regulated and widespread, estimated at $40 billion annually.
Out of the dark and into the light
In much of the world, ROSCAS are a critical part of the banking system where formal access to banking is limited. However, they are also increasingly the result of personal choice versus necessity.
Whether Informal, formal and even tech-enabled, the concept of ROSCAs is on the rise.
In 2024, the Bank of England Museum launched a special exhibition called “Pardner Hand: A Caribbean answer to British banking exclusion,” in the face of exclusion founded on racism, the community came together to support themselves. The Bank of England also created a series of free resources for schools to facilitate learning about ROSCAs.
In Egypt, MoneyFellows, a ROSCA style Fintech platform, now has four million users. Users of the app can set an amount, a timeframe and make deposits and later cash in—a ROSCA without the relationships.
In Germany and Austria, other variations exist. Some are even formalized. Bausparkassen (translated means building societies), an example of a formalized ROSCA, allows people to form savings groups for the purpose of buying, renovating, or building homes. The objective of a Bauspar collective is to provide each of its members with a low-interest loan so that they can realize their project within a defined period.
Coralus (formerly SheEO) is arguably Canada’s largest, formalized, now international women-led variation of a ROSCA. Founded by Vicki Saunders in 2013, the rotating, interest free non-profit loan fund today is just over $19 million. Members, called activators, contribute monies each year and vote on how to invest the money each year. The fund started with approximately 500 women each putting in a hand of $1,000—with no expected returns or possibility of financial extraction down the road. Like informal ROSCAs, members who contribute each year can democratically vote on which applicants will receive funding each year. Many activators are women entrepreneurs who, one day, also may apply to the fund.
Coralus started as a response to the well documented sexism, discrimination and emotional abuse women entrepreneurs, especially Black, Brown, lower class, single and immigrant women face when applying for loans or pitching for capital from traditional financial institutions and capital markets.
Saunders says “Over 500 million people around the world are already participating in local ROSCAs, over the generations. This is not a new idea. It does not want or need to be legitimized or included by formal capitalism to matter. It is an important example to understand as our current systems are being dismantled.”
In the summer of 2024, 20 leading women entrepreneurs, financial professionals, educators and nonprofit executives in Toronto gathered at Coralus House to learn more about ROSCAs. In her talk, Dr. Hossein said, “people remain in deep denial about the social impact value and importance of ROSCAs in Canada”.
The future of ROSCA in Canada
Andria Barrett, Director of the ROSCA Network (2020), Workplace Wellness Speaker, consultant, and co-founder of The Banker Ladies Council is excited about the future of ROSCAs in Canada as a force for positive social change.
“Research shows Canadians don’t save enough. Given emerging U.S. policies, I think more and more people on both sides of the border are going to lose their jobs in the coming year. As it becomes more difficult to make ends meet, working together to help each, building mutual aid networks and systems run by the people for the people, are back in vogue,” said Barrett.
The ROSCA Network is a grassroots organization currently being incubated by the Ontario Co-op Association. They exist to educate others about the value of ROSCAs.
Barrett says it’s important to get this right.
“I want to make sure we get rid of any misinformation or disinformation when it comes to what is a ROSCA or what a giving circle or pardner hand,” Barrett said. “I also want more of us, everyone, to step into our own power. Imagine! You ‘re in a ROSCA. Everyone puts in a hundred dollars a week or a month. You could buy a car. You could put a down payment on commercial property. We could start a construction company. What we can do together, I can’t do by myself. This is a great way to save money and to raise money … we can get so much further together.”
ROSCA research documents well how this model can transform and often save lives. It also shows ROSCAs have a significant role to play in making mainstream financial systems fairer and more respectful of all people, regardless of race, gender, citizenship status or economic class.
Barrett, hopeful more knowledge about ROSCAs will make a difference says “In the next five years, I would like to never hear another ‘Banking while Black’ story. I never want to hear about a teller calling for security when a Black women or person goes to a bank to deposit or withdraw ROSCA funds.”
HOW TO TAKE ACTION
- Deepen Knowledge: Watch the 2021 Banker Ladies Documentary Here (it’s about 20 minutes). Buy the Banker Ladies book by Dr. Caroline Hossein here. Or find it at your local library.
- Connect with the ROSCA NETWORK. Sign up for their newsletter here.
- Amplify: Consider hosting an “All About ROSCA” talk or seminar in the communities you lead. Email your inquiry here: [email protected]. Share this article on Social. Blog about ROSCA’s.
- Research: Sign up for DISE’s Collective’s newsletter to receive news, updates.
- Start a ROSCA: Contact the ROSCA Network for talks and support.
Experience a Uniquely Canadian ROSCA variation: Check out Coralus here.
Support rabble today!
We’re so glad you stopped by! Thanks for consuming rabble content this year.
rabble.ca is 100% reader and donor funded, so as an avid reader of our content, we hope you will consider gifting rabble with a donation during our summer fundraiser today.
Whether it be a one-time donation or a small monthly contribution, your support is critical to keep rabble writers producing the work you’ve come to rely on as a part of a healthy media diet.
Become a rabble rouser — donate to rabble.ca today.
Nick Seebruch, editor
