August 22, 2016   by

Accumulating Savings and Credit Association


 Individual saving can be done either by having an account in a banking institution or having a piggy bank.  When one joins a group they learn to save as part of the group.  Choices of saving vary from group to group. ASCAs require the members to contribute a set amount of money in each meeting and the funds are accumulated, unlike the ROSCAs where funds are redistributed at the end of each group session. The members of ASCAs can do many things with the money they have accumulated. Members can get money lent to them either without interest or with interest. Most ASCAs peg an interest rate on the funds collected to allow the money to grow.

 How an ASCA works

Accumulated Savings and Credit Association appoint a group member to manage their internal savings fund and keep records of their investment. Contributions can occur weekly, bi-weekly, or monthly depending on the group’s agreement. After the team has saved enough money it can start giving loans to its members. The loans are either paid back in installments or in whole with an additional interest rate or free–of–charge.

                                                                 Interest Rates


Charging interest on loans generates extra income for the group. The interest accumulated helps the team fund grow this can cover any running costs the group may incur. Members often agree on a manageable interest rate that each member can repay without strain. After the group has agreed to an interest rate and loan period, members are then allowed to borrow from the accumulated funds. Once the loans are paid off from the fund, plus profit accrued from the interest, the proceeds are redistributed to members.




Members within the ASCAS do not necessarily all have to borrow from the funds; some come in as pure investors within the group. Over time the group may then reform, perhaps with some changes in membership, and a new cycle begins.


1. Transparency in the funds given since all money accumulated is known to members and shared evenly according to the member’s needs
2. Efficient and require no running costs unlike setting up other forms of financial institutions.
3. Risk of misappropriation is small


1. May run a risk of fraud if not well managed
2. Requires additional financial management skills among the treasurer of the group.
3. The accumulated funds need safekeeping which may cause a challenge in the group since some do not have bank accounts.

Key factors that will help to run an ASCA successfully

1. The group needs to make a decision on meeting frequency.
2. Contribution amount needs to be agreeable to every member
3. Rules and regulations need to be decided upon for trust issues and discipline.
4. Leadership needs to be well-selected.
5. Find a safe place to keep money either in a safe box or a bank; if members agree upon a safe box, one member needs to maintain the key and the selected treasurer the safe box.
6. Saving period before lending should be clear.
7. There should be a proper accounting of funds within the group.


M. Beck, Impact of Accumulating Savings and Credit Associations (ASCA) on Child Well-being: Evidence from World Vision
Group in Mozambique, Master’s Thesis, University of Marburg, 2012

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