Haitian Savings Groups in Boston
On a warm April morning, a colleague from the Fletcher School and I ventured to Dorchester to go to church. This, of course, was not your average churchgoing Sunday. We had been researching how Haitian immigrants save in Boston, and churches in Dorchester - among other enclaves - are the heart of the Haitian diaspora community in greater Boston.
We arrived at the Haitian Pentecostal church a bit late, and were promptly ushered to the front row. After singing hymns in Creole, the pastor introduced us as researchers from Tufts University, adding that we were “brought from God” and could potentially help this community. Hoping to live up to these expectations, we somewhat awkwardly introduced ourselves and our project, with the pastor translating into Creole.
“All over the world, people use savings groups to help one another be motivated to save and lend to one another,” my colleague proffered. She added that we would like to learn about these groups and how they are helpful.
We were curious about this practice of using rotating savings and credit associations (ROSCAs) among this community, known in Creole as a sol or sou sou. A ROSCA is a small group with members who all contribute a fixed amount at agreed-upon intervals, typically set by all members. The amount collected at each interval is paid to one member of the group in turn, until every member has received the “pot”.
Many people participate in ROSCAs - a form of “informal” finance - because they do not have access to formal financial services, like banks. Yet we were surprised to learn that the Haitian diaspora in Boston are incredibly financially savvy. All of the people we spoke to had bank accounts and savings accounts. Yet by participating in sols, they received something extra - discipline from the pressure to pay in. Sols provide something that banks do not. As a result, these participants deposit more money into sols than they do into their savings accounts.
People use the payouts from sols for different uses. One female noted that she uses the payout for “school fees, savings, funds for vacations, and discipline.” For some sols, she invests as much as $1,000 a month. Another woman noted that sol participants “help each other.” For instance, “We might have a project, like every Christmas we plan to spend money [but we] are not willing to put in bank account. Some may have emergencies. [There] different categories.” More often than not, the money they generate is a lifeline to relatives back in Haiti. All of the people we interviewed are supporting family members in Haiti and regularly send funds from sol payouts to them via Western Union.
Sols are also widely used in Haiti, and many participants start at a young age. One woman did her first sou sou in Haiti when she was around 15, using allowance money from her mother and stepfather.
Sols work well for Haitians in Boston because, unlike banks, they are adaptive to the needs of their members. Sols enable different-sized contributions from different members, allowing for tremendous diversity in the amount of money people invest. One 51-year-old woman has participated in sols in Boston for over 10 years, investing anywhere from $20 to $1,000 per hand. Sols are also flexible, allowing members to persuade the others to let them receive their payout on the date they need the money.
As banks try to expand financial services to low-income and immigrant clients, they could no doubt learn something from these innovative ROSCAs. Group pressure provides discipline, and Haitians immigrants value flexibility in financial services that can adapt to their needs. Moreover, immigrants can and do value saving to meet their financial needs, and will find innovative ways to do so if banks cannot.