Category: Blog
on 21 April, 2022 / by SegunIn simple terms, Ajo is a thrift contribution. It’s an age-old means of contributing to saving and or gathering funds.
How it works
A group of people band together and contribute a specific amount of money in a particular period.
When this is done, the total contribution is given to a person in the group, then another period starts, and it becomes another person’s turn to collect the entire contribution.
This process continues until every individual in the group has had their turn at collecting the lump sum of the group’s contribution. This entire process is what OfficeAjo has made seamless, by automating the process.
An easy illustration;
Imagine there are five friends; Tayo and Tolu who work in the same company– Vera and Amaka who work in another company and Isa who is an agent for both companies. They decided that every month they would contribute ₦10,000. So at the end of the month, the group’s contribution is ₦50,000 in total.
This ₦50,000 is then given to Tayo.The next month the ₦50,000 is given to Tolu, the next month, it’s Vera’s turn. And it continues like that until Isa has gotten his own ₦50,000. By then, a full cycle is complete. Using officeAjo the money due is usually transferred to the account of whose turn it is.
Then, as a group, they can decide to start the contributory savings again, change the amount they contribute, increase or decrease the savings time frame, or even discontinue the pool savings arrangement.
Of what use would this particular kind of saving scheme be?
The advantages of the Ajo saving system include;
- Access to money faster than you would have gotten it if you were saving alone.
- Bolsters the saving habit.
- Better substitute to taking loans as it is interest-free
- Ability to pay in installments over a period of time.
- Assurance that your accumulated sum would come back to you as each member is committed, as long as the process is automated.
The disadvantage of the traditional Ajo saving system include;
- As much as commitment is irrevocable while a cycle is in session, unprecedented occurrences might prevent a member from contributing their quota in any given period. However with OfficeAjo, this is unlikely as participants consent to allowing their quota be deducted directly from their salaries.
- There could be delays when a member doesn’t contribute on time. Another situation that is easily avoided with officeAjo.
- There is no security against someone using and making away with everybody’s contribution. With OfficeAjo however, members are credit checked and verified before being allowed to join a pool.
- Most times, there are no plans for compensation should anything happen to everybody’s contribution. The OfficeAjo system is insured. Should anything happen, insurance steps in to cover whatever losses that might have been incurred.
- The system relies solely on trust that each member would keep to their commitment. With OfficeAjo you don't even have to personally know other pool members, you are assured of the safety of your savings.
Key takeaways
- A coordinator is usually selected among the contributors (someone the entire group believes to be responsible and disciplined)
- A treasurer is also chosen amongst the contributors to collect and keep account of the money. (someone, the entire group, believes to be trustworthy)
- Sometimes rules are put in place by the initiator; other times, the entire group agrees upon the rules to abide by.
- The group also tries to come up with a punishment for defaulters. And decide upon collateral should someone fail to keep up to their commitment.
- Ajo has been around for quite a while, dating back to the ’80s, and it is like an unspoken but sacred rule that once you join an Ajo savings pool, it is binding; you’re expected to keep up to your end of the agreement. No excuses and no exceptions. To date, people do not joke with their Ajo savings; in fact, it is not uncommon to find people borrowing to make their quota contribution.
OfficeAjo makes the whole ajo saving scheme simpler, especially for those in the workplace. It is designed such that anyone, from different workplaces, offices and organizations can register and join a pool.
It requires no initiator or treasurer as the whole process is automated. It also guarantees safety as participants allow their routine quota to be deducted from their salary account, if they can’t make a transfer themselves.
The best part? OfficeAjo is insured by their partners leadway insurance, so in the event that a pool contributor is unable to continue participation, insurance steps in to cover for the defaulter.
Originally practiced mostly by traders and market women, Ajo has long since spread and is developing, adopted by community members, family members, and even colleagues in the office.
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