Tandas

Many communities around the world don’t trust financial institutions and governments. Many people, especially in the Global South, do not even have a savings bank account. Instead, communities have developed other ways to save money and take out loans. One method is through a community-based practice called tanda in Latin America, susu in West Africa and the Caribbean, jam’eya in much of the Arab World, paluwagan in the Philippines, and hundreds of other terms across different parts of the globe.

A tanda is when a group of friends, family, neighbors, or even colleagues pool their money together to help each other either save or borrow. For example, a group of six people might commit to paying $200 every week for six weeks, and then each receive a lump sum of $1,200 once during a six-week period. A tanda may also be organized if a community member is in a sudden need for cash due to a medical emergency, an upcoming event, or a purchase beyond what they could normally afford. Those in need will get access to a cash loan upfront and repay it later through their contributions. Others use it as a saving opportunity.

To organize a tanda, you first need to decide on who the participants are and how many. Then, as a group, you will decide on the amount that each person will pay and the frequency (which might be weekly, monthly, yearly, or otherwise).You will also decide the order in which people will get paid; it could be through a random draw or by order of urgency and need. Finally, you need to pick someone who will coordinate the tanda, which involves collecting and distributing payments.You can also add any additional rules that the group agrees on, such as that money will be pooled at weekly meetings or processes for exiting a tanda and swapping turns.

Traditional banking services often require credit history, monthly fees, lengthy forms, and identity screenings. These can be barriers to low-income communities, immigrants, or people who work in the informal economy. Tandas offer a flexible, transparent, and simple banking alternative to many community members who don’t have access to formal financial services.

When you participate in a tanda, you are also participating in a trust-building exercise. Oftentimes, people participate because they trust the organizer, and gradually they build trust with each other. Because of this, tandas offer a more comfortable space for a collective financial experience when compared to banks, given the participants work directly with their peers rather than with bankers, who have more power and authority and an incentive to exploit.

The beauty of this communal practice is that the space and trust created through a tanda encourages people to have vulnerable conversations about their finances and support each other in planning and budgeting. It helps break the taboo that many communities have around financial planning or discussing money. Additionally, technologies like video chat and mobile cash payments enable people to organize tandas across borders.

One criticism of tandas is that there are no mechanisms to prevent people taking advantage of each other. However, this criticism ignores the weight that relationships and societal expectations have on people’s behavior. Studies show that it is rare that tanda participants miss payments, likely because tandas are rooted in trust and relationships—this communal aspect serves as a form of accountability.

Many people find it easier to be disciplined with their savings if they are committed to a group or know that people are depending on their contribution. Also, some people will spend money if it’s laying around, so keeping it held in a communal fund can prevent needless spending. More importantly, the collective nature of the tanda offers an economy rooted in community, rather than in individualism, and in relationships rather than transactions.