Equb

Equb is a traditional rotating savings and credit association, primarily found in Ethiopia and among the Ethiopian diaspora. It operates as a communal financial system where a group of individuals, typically friends, family, or colleagues, contribute a fixed sum of money at regular intervals. The total sum collected in each round is then given to one member of the group, determined by a pre-arranged system. This system can be based on a lottery, a pre-determined order, or even bidding, where members might offer to forgo future rounds in exchange for the current pot, effectively taking out a loan.

The core principle of equb is mutual trust and social obligation. Members rely on the commitment of others to contribute their share, and the group's social dynamics often ensure that everyone fulfills their obligation. It serves as an informal banking mechanism, allowing individuals to access a lump sum of money for significant expenses such as starting a business, purchasing assets, or covering unexpected costs, without needing to go through formal financial institutions. The process continues until every member has received the lump sum once. Equb can vary in size and duration, with the number of participants and the frequency of contributions being flexible according to the group's needs. While offering a valuable financial tool, it also carries inherent risks, such as the potential for default by a member, though this is often mitigated by strong social ties.