Asue -- An Strange Way to Bank

I was perusing the online newspaper, and I saw the ad above put out by RBC or the Royal Bank of Canada based in Nassau. Canadians reading this blog will know the Royal Bank as a staid conservative, large institution. They would be surprised to know that they run an Asue here in the islands.

The Black population in the Bahamas is largely of West African origin -- specifically Yoruba. Some of the customs came across the ocean with them when their ancestors were stolen from Africa. An Asue is one of them.

If you google asue, you will see a reference to it as a Yoruba style lottery. It is nothing of the sort. It started out as a poor man's banking mechanism. Let us suppose that a person needs $100 real quick. That person is unbanked and does not have access to credit. The solution was to form an asue. He found 10 people to kick in 10 dollars. Then he took the first "draw" of $100 dollars. Everyone in the Asue kicks in $10 a week for ten weeks and every single person gets a draw of $100. It is almost like an accelerated savings plan. In its original sense, it is a net-net game with no winners or losers or profits.

So how and why would the staid Royal Bank get involved with an asue? Well, one of the biggest issues with joining an asue, is if someone welches or cannot pay their weekly or monthly contribution. Once they get their draw, they stop paying into it, and the poor people at the end of the list get shafted.

With the Royal Bank as the asue-maker, they have access to the person's bank account and assets, so the incidence of default drops dramatically. What does the Royal get out this? Silly, they are a bank. They get profit and fees. They charge a fee to hold the asue. There is no risk for them, because it is not a credit function. They just make money for holding the wallet.

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