• Sunday, December 10, 2023
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How ‘Ajo’ system thrives amid digital payment growth


Afaemefule Obi, a 37-year-old Boutique owner at Ilewe Ejigbo, who registered with the traditional saving system known as ‘Ajo’ where he saves N2000 daily, has been signing his card since 2021, despite having 3 commercial bank accounts. He uses the return for a big project at the end of the year.

After his first sale of the day, Obi said he always brings out the N2000 for Ajo, placing it on the table and waiting for the aged woman popularly known as the ‘Alajo’ to come and mark his card. According to him, It has become such a routine that most times she will just come, mark his card and leave with the money without a single conversation.

“This has enabled me to manage my daily expenses knowing that I must meet up with the N2000 target which I must deliver to her. I have an account with Zenith bank, Access and Opay but Ajo is the primary way I save money. The first saving I collected from the Ajo woman was N700,000 which enabled me to clear my rent and travel home in 2022 and I have also gone far with it this first half of the year,” he said.

Despite the growing number of banks and Fintechs in the country, the Ajo banking mode has continued to thrive as many unbanked Nigerians especially adults and traders continue to patrons it.

The number of bank accounts linked to BVN according to the Nigeria Inter-Bank Settlement System (NIBBS) is currently at 57.9 million while the adult population is at 106 million. This shows that less population of adults still don’t have bank accounts.

The percentage of the Unbanked population in Nigeria is estimated at over 40 million. Data from the Nigerian Communication Commission also shows that Nigeria’s internet penetration (those who have access to the internet) stood at 48.2 percent

This implies that many Nigerians still don’t have widespread online connectivity solutions to carry out digital banking while some are not enrolled to any bank which has enabled the Ajo system to adapt in the midst of digital advancement.

However, David Ugo (not real name), an Ajo operator who has been in the business for over 10 years told BusinessDay correspondent that the system is thriving in the midst of advancement and will continue to grow despite the changes.

“I don’t see anything disrupting the Ajo banking system because it has survived several stages and will continue to grow. I see less of a competition between the system and the likes of Fintechs, banks and other digital means of financial transactions. Many people have seen it as a better option than going to the bank or saving with their wallets,” Ugo said

He said many Ajo businesses have also fit into Fintech services and opening branches like POS terminals and combining the business together.

“What many Ajo businesses have done is upgrading and adapting to the latest technology transformation which didn’t stop or affect the Ajo business but instead added to the revenue. I have my office where I also carry out my POS business and also go for daily contributions. I even see the business evolving as time goes on.”

The Ajo banker explained that irrespective of many enrollments with digital wallets like Opay, most people still mark cards with Ajo, noting that he personally attends to over 100 people and more daily despite having other people in the business operating in the same axis.

“It’s a market that looks the same but different. Most times, there is more collaboration between digital banks and our services. We also patronise their services by keeping customers cash with them and taking them with charges when we need them most times. During the scarcity period, most of us who keep cash at home also helped out to circulate cash through them,” he added.

On how they make profit, he said that customers are entitled to pay the exact amount they contribute at the end of the month. He said If a customer enrolled in daily N5000 contribution,then N5000 comes to him at the end of the month.

According to a BusinessDay survey, four out of 10 traders in Ikotun market in Alimosho, Lagos State are saving under Ajo banking.

“Ajo has fit into both traditional and modern banking methods. Despite the population of aged people enrolling, you still find vibrant and enlightened youth marking paper daily. I sell food here with my wife and I know how much we save daily from Ajo,” Emeka Ugba, a food seller at Liasu, Ilewe said.

According to Ugba, the banking system has also empowered many low income earners with the purpose of achieving a set target within a period of time as it gives room to take strict decisions.

“Many people I know with little income are also surviving with this mode. I have a mechanic friend who introduced me to this banking system that contributes 3,000 daily and I can tell you he is paying his bills. He doesn’t have a bank account but has trusted this system over the years. The savings system helps in cutting down expenses and building self discipline. When you have an account in the bank, you might be forced to withdraw at any given time but this is different because you have already set a project out.”