We tend to think of finance as something that happens inside banks, insurers and markets. Yet finance begins somewhere more basic – in relationships between people.
Money may be fungible in economic theory, but, in social life, we constantly give it purpose: money for school fees, money for funerals, money for a business, money set aside for people not yet born. The $100 reserved for school fees is not given the same social value as the $100 contributed when a neighbour dies.
Long before credit scores or capital markets, communities had worked out how to turn small savings into capital, survive shocks and make wealth last beyond a lifetime.
They have different names: susu in West Africa, chit funds in India, chamas in Kenya, iddir in Ethiopia and waqf across Islamic societies. We group them as “informal finance.” But like their institutional counterparts, the question of trustworthiness lies at their core.
Every financial system has a theory of who is reputable and reliable. Some write this theory into relationships, while others write it into property titles, credit scores and algorithms. The underlying principle is the same.
Money as obligation
Consider a rotating savings and credit association, an informal financial group also known as a ROSCA. Ten people might each contribute $100 a month. Every month, one person receives the $1,000 pot until everyone has had a turn.
A ROSCA turns relationships into credit. Someone can access a lump sum that might otherwise take months to save because others promise to keep contributing tomorrow.
Reputation, reciprocity and social accountability do work that formal finance assigns to contracts, collateral and credit histories. That can create access, but also pressure. Trust includes some people precisely because it may exclude others.
Money as collective possibility
Savings groups take the idea further. Instead of rotating the pot, members accumulate savings and lend from a common pool. Across East Africa, chamas and Village Savings and Loan Associations help members pay school fees, buy agricultural inputs or invest in businesses.
Many are dominated by women. Rather than evidence that women are naturally more collaborative savers, there is a structural explanation: Formal banking came to rely on property, collateral and contractual rights at a time when women in many societies had unequal access to all three.
What looks like an individual deficit – a lack of collateral or credit history – can reflect who was permitted to own assets and accumulate wealth in the first place.
Where formal ownership is unequal, relationships can become economic infrastructure. Savings groups can also keep locally generated capital circulating locally.
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Money as solidarity
Finance is also about what happens when life goes wrong.
In Ethiopia, iddirs traditionally provide financial and practical support when a member’s family experiences a death. The logic is similar to insurance: A devastating household loss becomes more manageable when many agree to share it.
Commercial insurance uses contracts, actuarial models and regulations to create trust between strangers; mutual aid relies more heavily on membership and reciprocity.
Neither makes risk disappear. Both answer a social question: Whose loss are we willing to make our own?
Money as responsibility to the future
The centuries-old Islamic practice of waqf introduces another dimension: time. A form of endowment, waqfs dedicate assets to enduring social purposes, including education, healthcare and social assistance. Waqfs often take the form of buildings that are preserved for a specific use, to support the intended beneficiaries over the long term.
A waqf asks: What do we owe people we may never meet? Its answer is to preserve an asset while directing its benefits across generations.
What money makes visible
Community finance should not be romanticized. Close-knit systems can reproduce hierarchies, exclude outsiders and impose powerful obligations. Formal finance achieved something extraordinary by allowing strangers to transact across vast distances and at enormous scale.
Yet, formal finance is not a neutral endpoint of financial evolution. Community finance often turns relationships, reciprocity and reputation into capital. Modern finance increasingly turned property, contracts and institutional authority into capital.
That distinction has a history. Many banking, property and corporate structures that became globally dominant expanded alongside European capitalism and empire. Colonial states did not introduce finance into societies without it; they elevated currencies, property regimes and institutions over practices that already existed. Gendered and racialized inequalities in ownership also shaped who could participate in those systems and on what terms.
A system built around collateral privileges those who hold recognized assets. A system built around relationships privileges those who belong to trusted networks. Neither is neutral. Neither is inherently equitable. They distribute access, obligation, risk and power differently.
The question is not what “informal” finance can teach modern finance but what becomes visible when we recognize that all money has a social life. The mechanisms change. The underlying question does not: Who is money for?
Shilpa Tiwari is the founder of NoWomen No Spice and Isenzo Group.
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