In Postcapitalist Imaginaries of Finance: A Diverse-Economies Perspective on Equubs within the Ethiopian Diaspora in Germany, a recently published open access article, CERN members Michael Emru Tadesse and Esra Erdem explore the practices of community-based financing by the Ethiopian diaspora in their efforts to counter systemic financial exclusion in Germany.
Tadesse says, “The Ethiopian diaspora in Germany is drawing on extensive knowledge of equubs developed in Ethiopia over the centuries, and the members of these groups are proud to be continuing this tradition in Germany.”
Equups are an example of a ROSCA, a Rotating Savings and Credit Association. Across the globe there are a multitude of different types of ROSCAs that have been developed to meet the savings and credit needs of communities, most especially in the majority world (with many now being adapted for use by diasporic communities in minority world settings).
For the Ethiopian community in Germany, equubs are an important financial mechanism that helps members achieve their financial goals through a long-standing practice based on mutual aid and community belonging that is the antithesis of the formalised banking system, which is experienced most benignly as impersonal, inflexible and bureaucratic and more extremely as explicitly anti-Black.
Tadesse and Erdem frame their research findings in terms of the distinctive community economies approach of ‘reading for difference’ thereby highlighting three important elements of this financial practice.
First, they show how equubs contribute to a diversified financial ‘landscape’ and provide a viable system of savings and credit beyond mainstream market-based mechanisms.
As Tadesse says, “In one example in Berlin, there are six members who each make a monthly contribution of €250 and this makes a collective pool of €1,500 each month. Each month, members take turns to receive the pool of €1,500. The equub cycle ends after six months, when each member has received the pool once. Members then decide whether or not to start a new cycle. In other equubs members contribute up to €1,000 each. Each equub generates an important financial pool that members can draw on for purposes that include purchasing household goods, celebrating life-cycle events such as births and weddings, supporting self-employment or small family-based businesses, and sending money back to Ethiopia.”
Second, by reading for difference they show how financial practices can be grounded in peer-based relationships of trust, reciprocity, solidarity, and conviviality that operate beyond the ‘cold rationality’ of mainstream market-based mechanisms.
Tadesse explains how these relationships enable each equub to devise creative and equitable ways of responding to the dynamism of the group. “When one equub decided to increase each monthly contribution to €1,000 they accommodated their low-income members by having higher income participants make up the shortfall. Each member still received a share based on what they had contributed. One member described this solution in terms of the equub as being beyond an equub and being like a family.”
Third, by reading for difference Tadesse and Erdem show how equubs are interconnected with other diverse economic practices, with participants comprising workers, self-employed people and owners of businesses. This adds considerable diversity to the motivation and capacity of equub members who participate in this community and relationship-based financial practice, and to understandings of the diverse purposes that equubs and other ROSCAs can serve in both diasporic communities and in the community of origin.
The insights offered by this article add to the body of work by community economies scholars on ROSCAs, especially the 2022 collection Community Economies in the Global South edited by Caroline Shenaz Hossein and Christabell, P.J. (Oxford University Press).