A breezy January morning made the 1°C temperature feel even chillier. But it was an important day for the young man: he was about to face his entire family to ask for a loan to seed his new business idea.
He had contributed to the family’s savings circle, but he was asking for a withdrawal this time.
A savings circle is a group of family members or friends who regularly contribute to a collective fund. Members gain access to a share of the proceeds on a rotating basis or as needs arise.
A savings circle can also be called a money pool. Or flip the benefit, and it’s known as a lending circle. The practice carries many names worldwide — including tanda, sou-sou and tontine.
It can be an informal gathering with regular monthly contributions and one disbursement or one individual’s request for funding approved by the group. Some savings circles predetermine automatic withdrawals for each member in a particular order.
Berry Gordy was 29 that cold Detroit day in 1959 when he faced the family’s pointed questions regarding a $1,000 loan from the Ber-Berry Co-op — named after his parents, Bertha and Berry. After a lengthy discussion, the group voted to give him $800.
And with that seed money, Motown Records was born.
David Ellis, a digital media curator at the Motown Museum in Detroit, says Mr Gordy’s parents created the savings effort to help seed family business ideas. Each family member, including spouses, contributed $10 a month to the fund.
“The funniest part … is the interest that Berry Gordy had to pay. They were family, but they were still very professional people,” Mr Ellis adds.
Unlike many traditional family and friends savings circles, Mr Gordy had to repay the loan and would be charged 6 per cent interest if he didn’t pay off the note within one year.
However, repayment wasn’t a problem. Motown Records became a music institution and Mr Gordy sold the label for $61 million in 1988. A 50 per cent share of the Motown song catalogue garnered an additional $132m for Mr Gordy in 1997.
After finishing graduate school, Fonta Gilliam was working as a US foreign service officer in South Korea, “stamping visas at the consulate”.
“This lady walks up to my window … wanting to immigrate to the United States to start a business. She was going to start a dry cleaner if I remember correctly.”
The woman, a street vendor, had a six-figure sum in a savings account.
“I remember thinking, ‘OK, this is fraud,’” Ms Gilliam says.
But the woman related how she had participated for years in a savings circle with friends in her neighbourhood, “and it was finally her turn” to make a withdrawal.
“I learnt how a lot of people around the world are using informal saving and lending traditions — sou-sous, tandas — as a way to build wealth outside of the banking system,” she adds.
Ms Gilliam discovered that the social savings circles in these underbanked and underserved communities often have a low default rate. The social factor is key. “People are more likely to keep strong financial habits when their peers keep them accountable,” she says.
If you are looking to start your own savings circle, enlist trusted friends and family. Emphasis on “trusted”.
Your group will need to determine the amount and frequency of deposits and the order of individual withdrawals.
For example, if 12 members put in $100 per month and distributions occur monthly on a rotating basis for one year, who gets the first $1,200?
It’s an important consideration because early withdrawals are essentially zero-interest loans, while later distributions are effectively interest-free savings plans.
A few savings circle apps have been developed in recent years, such as Esusu Savings and MyMAF, which manages lending circles set up through Mission Asset Fund in the US.
And later this month, Ms Gilliam and a team of FinTech developers in Washington are set to release a savings circle and social banking mobile app called Wellthi.
While group savings goals will be shared, funds in Wellthi will be tied to individual digital wallets, linked to a payment card and never co-mingled.
And it all began with that chance encounter when the Korean woman was looking to start a business in the US.
“It really kind of changed my life, to be honest. And I had almost denied that woman a visa,” Ms Gilliam says.
UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
UAE currency: the story behind the money in your pockets
Mobile phone packages comparison
The specs
Engine: 6.2-litre V8
Transmission: seven-speed auto
Power: 420 bhp
Torque: 624Nm
Price: from Dh293,200
On sale: now
THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
Favourite dessert: Umm Ali with dark camel milk chocolate flakes
Favourite hobby: Football
Breakfast routine: a tall glass of camel milk
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 240hp at 5,500rpm
Torque: 390Nm at 3,000rpm
Transmission: eight-speed auto
Price: from Dh122,745
On sale: now
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COMPANY%20PROFILE
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
RESULTS
%3Cp%3E5pm%3A%20Wathba%20Stallions%20Cup%20%E2%80%93%20Handicap%20(PA)%20Dh70%2C000%20(Turf)%202%2C200m%3Cbr%3EWinner%3A%20RB%20Sarab%2C%20Allaia%20Tiar%20(jockey)%2C%20Khalifa%20Al%20Neyadi%20(trainer)%3C%2Fp%3E%0A%3Cp%3E5.30pm%3A%20Mamsha%20Alkhair%20%E2%80%93%20Handicap%20(PA)%20Dh80%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Mutaqadim%2C%20Ray%20Dawson%2C%20Ibrahim%20Al%20Hadhrami%3C%2Fp%3E%0A%3Cp%3E6pm%3A%20Emirates%20Fillies%20Classic%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Almotajalliah%2C%20Ray%20Dawson%2C%20Ibrahim%20Al%20Hadhrami%3C%2Fp%3E%0A%3Cp%3E6.30pm%3A%20Emirates%20Colts%20Classic%20%E2%80%93%20Prestige%20(PA)%20Dh100%2C000%20(T)%201%2C600m%3Cbr%3EWinner%3A%20Fadwaan%2C%20Antonio%20Fresu%2C%20Ahmed%20Al%20Mehairbi%3C%2Fp%3E%0A%3Cp%3E7pm%3A%20The%20President%E2%80%99s%20Cup%20%E2%80%93%20Group%201%20(PA)%20Dh2%2C500%2C000%20(T)%202%2C200m%3Cbr%3EWinner%3A%20Mujeeb%2C%20Richard%20Mullen%2C%20Salem%20Al%20Ketbi%3C%2Fp%3E%0A%3Cp%3E7.30pm%3A%20The%20President%E2%80%99s%20Cup%20%E2%80%93%20Listed%20(TB)%20Dh380%2C000%20(T)%201%2C400m%3Cbr%3EWinner%3A%20Western%20Writer%2C%20Richard%20Mullen%2C%20Bhupat%20Seemar%3C%2Fp%3E%0A
The biog
Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball
More from UAE Human Development Report:
Killing of Qassem Suleimani
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
