Thread: Tontines
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Old 03-21-2012, 03:28 PM
grude grude is offline
Join Date: Dec 2011
Posts: 8,596
Originally Posted by Sal Ammoniac View Post
I've heard that tontines are still an important part of the economic landscape of West Africa. Where formal lending institutions are few, it's just about the only way a small entrepreneur can have access to capital. But my understanding is that the African tontines work on a somewhat different principle...

Okay, actually, I've just looked it up here. Apparently there are two kinds: the rotating and the accumulating. In the rotating kind, at every payment period, one of the members gets the whole amount, and the cycle will continue until every member has had a payout. In the accumulating kind, everyone ponies up at regular intervals, and the money collected is loaned out, at interest, to the members, or put into some investement -- and then when the members decide the time is right, the entire pot is split among the members.

And if I can editorialize, I wish we had more of these accumulating tontines right here in America, assuming they're not illegal. Stuff Bank of America, anyway.
Its called a susu in Trinidad(she is running a susu), and the only variety I've personally seen is the one where all participants make small monthly payments and each member collects the whole pot on a revolving basis. You bet your ass fraud or people dropping out happens a lot.