Have you ever dreamt of achieving a goal so big that it seemed impossible to reach alone? It could be that dream vacation, renting your first big boy/girl apartment, or finally starting your own business. Imagine the feeling of accomplishment you could get and give your family or close circle of friends when you all achieve your big dreams together. The truth is, achieving anything, from saving for a dream vacation to buying your first car or planning your dream wedding, often feels even better when done alongside friends.

In Nigeria, Ajo, an informal savings system was one of the practices that fostered a culture of communal living, trust, and collective responsibility. The Ajo thrift system allows friends, families, and communities to contribute to a pool of money that is distributed amongst the group to achieve their goals. While Ajo has its benefits, it is also proven to have several limitations and disadvantages. The traditional thrift system (Ajo) is prone to human error and even the risk of mismanagement or theft. 

Today, modern alternatives like Group Contributions platforms build on the collaborative nature of the Ajo savings system while providing flexibility, automation, tracking, and convenience through technology. In this article, we share the major disadvantages of the Ajo thrift system in modern-day Nigeria and 3 reasons why a Group Contributions app is a better alternative to group savings. 

Disadvantages of the Ajo thrift system

1. No growth on savings: Unlike group contribution apps that offer interest on savings, Ajo typically does not provide any form of passive income. This means your hard-earned money loses purchasing power due to inflation and you miss out on the potential for wealth accumulation over time. 

2. Security concerns: Ajo relies heavily on trust, which can be risky. There’s always a chance of mismanagement, theft, and fraud without encryption or other security measures found in group contribution apps. 

3. Manual and error-prone: Collecting and distributing money in Ajo often involves a designated member. The process is manual, which is time-consuming, prone to errors, and has the potential for delays and mistakes during the collation of funds.

Why Group Contribution apps are better

1. Grow your contributions: Group Contributions platforms like Bankly offer competitive interest rates (15% upon maturity) on your contributions. This provides users an opportunity to earn passive income on their savings. 

2. Unlimited contribution goals: With Group Contributions apps, you're not limited to saving towards a single goal. You can set up multiple goals, including a dream vacation with friends, your first car, your wedding, and so much more all in one app.

3. Security and Transparency: Group Contributions apps use digital accounts to keep your money, which minimizes the risk of loss. Also, apps like Bankly provide clear transaction histories, allowing everyone to see how the funds are managed. Members can also monitor the progress of the contributions and the movement of money in and out of the account. Each member receives a notification for every deposit and withdrawal done.

While Ajo holds a special place in Nigerian tradition, Group Contributions apps like Bankly offer a more secure, flexible, and potentially rewarding way to save money with friends and family. With benefits like 15% interest on contributions, multiple goals, and easy tracking, the app can help you and your community achieve your shared financial goals faster.