Abstract
The rotating savings and credit association (ROSCA) has been shown, in the extensive literature, to exist in developing countries in both rural and urban areas, among both females and males. This paper intends to provide a critical reflection on the use of ROSCAs in reducing poverty in local communities. It describes the different forms of informal and microfinance institutions, discusses the household poverty measure and, reviews the relationship between ROSCAs and poverty reduction. The paper argues that ROSCAs are likely to make a difference tolocal communities’ welfare, measured as a change in the household consumption.
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