Ayuuto/hagbad

[Lamagoodle]

"A beloved child has many names" is a universal saying.
We call it Ayuuto (sic; Italian), Hagbad, and many other names.
If you see someone constructing a new home overseas,
If you see a new immigrant who has risked high seas to come to Europe,
If you see a Somali driving a new car,
If you see a Somali going back home to brag about overseas life,
If you have witnessed an increase in charitable enterprises amongst somalis in recent years,
If you meet a woman spot a new set of dahab, a new dirac, yes, even a new husband.
If someone you knew back home has in recent years amassed some wealth,

If you see the above and more…

Chances are that there is Ayuuto/Hagbad involved.

In human history, savings and borrowing has always been characterized by the notion of trust. Banks, saving societies and almost all lenders trust that those involved will fulfill their obligations.

In Bangaladesh, Mohamed Younis, initiated an Ayuuto/Hagbad like scheme to help poor women to start business. He earned recognition and the Nobel Prize.

To students of the social sciences like your correspondent, Ayuuto/Hangab is more than a saving scheme.
It is a testament of how we somalis can build trust.

At a time when we have weak institutions, Ayuuto/Hagbad has survived.

Historically, the aim of Ayuuto/hagbad was not to enrich another party. It was a simple mechanism that ensure that housewives could buy things like perfumes, uunsi, lubaan, a garbisaar here and there or a new kettle or use it to visit family.

The husband, as the breadwinner provided the housewife with money to cover necessities. There was no time for excess. The housewife went in the morning to find bargains in order to feed the family. She went from butcher to butcher, from grocery to grocery in order to save a penny or two. She than saved this for ayuuto/hagbad. When it was her time she used it astutely.

Today, it is a banking system for diaspora somalis. You might overhear a woman/man telling a relative that he/she does not have the money now but is engaged in Ayuuto!

Someone was telling your correspondent the other day that there are more men involved than women.

How did ayuuto/hagbad trust survive when all other institutions have broken down? Could we learn something from Ayuuto/Hagbad schemes that will lead to the creation of a better society?

Wondering.

[Shirib]

Somali's are pretty trusting of each other except when it comes to politics. Even the xawaalad system is based on trust.

[Shirib]

btw on a tangent, i've read Banker for the Poor, met Dr. Muhammad Yunus, sat down at an actual Grameen village meeting where loans were being paid back and talked to the women about how these loans have drastically improved their lives. But I am still having a hard time reconciling all the good, with the astronomical interest rates that are attached to micro finance. What are your thoughts?

[Tuushi]

There is a lot of trust involved but ayuutos arent without their share of nitghtmares;of folks cashing out first and refusing to pay up.

Altho,it is a great saving tool for those who dont want to save at a bank/are easily tempted to use their savings.

[metamorphosis]

haqbad survived because all parties involved directly deal with each other not to mention only the most trustworthy are recruited. One must have a good reputation among the kin to join. The fact that it is interest free also adds to its survival rate.

[Shirib]

Often times they're done with close associates who you see often. Also if one person cashes out and dips, its not a regular loan, where its a one on one dealing, ayuuto's usually include 5, 10, 12+ people. So if you refuse to pay up you just pissed off not one person but an entire group of people.

With Somali's word travels fast. If you rip off one group in an ayuuto it ensures you're never allowed into an ayuuto again. You're also a social outcast. It's the socialization of Somali's which ensures the trust of these loans.

[Lamagoodle]

Shirib, Grameen Bank ( I have read critical articles/papers about it) is not as good as it has been marketed. Perhaps in the begining but when donors started pouring money, corruption became the norm.

Tuushi, true but that is still an insignificant percentage. Of course, when almost everyone is involved, you will expect some frictions.

Meta; true. Mostly there is a leader who is trusted.

[Tuushi]

Often times they're done with close associates who you see often. Also if one person cashes out and dips, its not a regular loan, where its a one on one dealing, ayuuto's usually include 5, 10, 12+ people. So if you refuse to pay up you just pissed off not one person but an entire group of people.

With Somali's word travels fast. If you rip off one group in an ayuuto it ensures you're never allowed into an ayuuto again. You're also a social outcast. It's the socialization of Somali's which ensures the trust of these loans.

True,u have summed it up well.

I was asked to join a recent one,20+ people,worse than a mortgage.

[Shirib]

Lamagoodle,

What have the criticisms been in short? What do you think of that kind of microfinance compared to traditional ayuuto's?

[Lamagoodle]

Shirib, Everything from spousal abuses (men feel that their power position has been compromised) to corruption, loan sharks and debt for life.

[OliveOil]

Ayuuto has made me broke...I'm in a thousand dollars a month ayuuto with my mother's friends. The fudgers made me the last person because "I don't need it as much as they do"

[Hyperactive]

arabs call it jam3iyah. it's good way to have cash instant wth no interest if you first one.lol

hey i want to mention if there is any banker here; recently my bank made mistake and deposit around 1800 us dollar in my bank account. i called them twice to take it off and made clear not my money. the guy took the call told me will call the branch and will take 24 hours to correct it. that was sunday, now is friday . i checked my online banking and the money still there!! if i spent all, what will happen? will they sue me? really i mean it. i need answer.

[Tuushi]

arabs call it jam3iyah. it's good way to have cash instant wth no interest if you first one.lol

hey i want to mention if there is any banker here; recently my bank made mistake and deposit around 1800 us dollar in my bank account. i called them twice to take it off and made clear not my money. the guy took the call told me will call the branch and will take 24 hours to correct it. that was sunday, now is friday . i checked my online banking and the money still there!! if i spent all, what will happen? will they sue me? really i mean it. i need answer.

Once they clear and make sure it was a mistake,they will most likely want their money back.And will most likely take out whatever goes to ur account.

[Lamagoodle]

Hyper, I don't think they will sue if you can prove that you acted in good faith.

Ohio, poor lass. You will be the loser at the end of the day because of what economists call " opportunity costs". If you are the first person to recieve the money, you can invest in stocks and other schemes and earn yourself money. The last person is always the loser.

[Hyperactive]

lama to back your original question to learn from that system of ours to build a trust. somalis always trust each other in personal level. the problem when qabil interest clashes. even personal interest is fine with us, just dont cross my tribe's interest or my warlord's interest.