Sou-sou makes a difference
It was a cool Friday morning in Brooklyn when a United States lawmaker in Washington brought back memories of a Barbados of yesteryear.
Indeed, it was about the Caribbean, not simply Barbados, and she dealt with the way people raised funds to improve their living conditions or even finance what today are called microenterprises.
Congresswoman Yvette Clarke, a New York Democrat with West Indian roots, spoke about the importance of Caribbean immigrant entrepreneurs turning to the “sou-sou” or “SUSU” for the money to launch a start-up. She spoke at a Caribbean-American Chamber of Commerce and Industry networking session that focused attention on the growth of small business and the role of women in New York. When she spoke the audience perked up.
“We have to think outside of the box,” said Clarke. “We have to repair what may be an error in our credit rating or we need to look to non-traditional lending opportunities as well.”
An advocate of small business development, the member of the House of Representatives explained that the US Small Business Administration (SBA), didn’t provide funds directly to small businesses, but it guaranteed the loans that come from traditional financial institutions, such as the banks.
“And so we still have to go to the bank and the banks are still going to look at whether they can trust you to repay your loans. That can be subjective,” said Clarke.
“So, we often have to work with credit unions as a way of repairing and strengthening ourselves financially if we are going to build a solid foundation for the growth of our businesses,” she went on. “We need to look at non-traditional lending opportunities that existed in Caribbean communities ever since I was a child, probably before, the sou-sou. There is nothing wrong with the sou-sou and it works.”
The “sou-sou” is a friendly cooperative savings scheme in which members of a small group of people contribute an equal sum of money every week or month to a pool, giving it to a trusted person who pays the funds to participants on a rotation basis. It is alive and well among West Indians in New York City and it has different names. For instance, in Barbados it was called a “meeting turn” but in the Bahamas the “esu” while Guyanese referred to it as the “box,” according to Dr Richard Allsopp’s Dictionary Of Caribbean English Usage. Jamaicans label it “pardner”, but Trinidadians and Grenadians opt for “sou-sou.” Belizeans describe theirs as “the syndicate”.
Some experts and historians trace the system’s roots to Africa, insisting the name is a Yoruba word, “eesu”. But regardless of the label, the approach is basically the same: a savings plan that relies on trust, honesty, a planned goal and determination to raise money in cases where there is limited access to bank funding. The “sou-sou” has been a fact of financial life in the Caribbean for more than a century.
One “sou-sou” or “meeting turn” in Brooklyn has 40 members, each of whom make a monthly contribution of US$500 to the pool which reportedly makes a US$20 000 lump sum payment to participants when their turn comes around. That money often goes to finance a child’s college education, improve living standards, pay debts or help launch a business. The system is important too because it prevents its members from dealing with a neighbourhood bank whose executives are sceptical about the ability of many people of colour to repay loans.
With only 1.7 per cent of SBA lending going to black businesses, the Congresswoman said it was clear that minority and women-owned enterprises needed all the capital they can muster if they are to thrive.
The problem of financing starts with a brutal bit of reality: the existence of a wide gap in the wealth of Blacks and whites. According to a recent study the median net worth in black households in the US was less than US$9 000 compared with US$114 000 for whites. Another hurdle for enterprising West Indians and African Americans is they must rely more than whites on their own resources to open up business.
On average, black and Hispanic business owners put up 56 per cent of the initial capital, with equity and external debt accounting for the rest. Whites put up 39 per cent, researchers found. The upshot: black and Hispanics are routinely hamstrung for capital.
And that’s where the sou-sou or credit union can come in. New York State Supreme Court Justice Sylvia G. Ash, the first vice chairman of New York’s Municipal Credit Union which has at least US$2 billion in assets, agreed with Clarke.
“The credit union allows you to save a little but you get a higher interest rate and you are able to get loans without the income banks demand or the credit score they look for,” said Judge Ashe whose family’s roots are in St Vincent and Trinidad and Tobago. “The credit union helps the little people, the mom and pop operators. I see a lot of similarities between the concept of the sou-sou and the credit union.