Buffalo News (New York)
By: Emma Sapong
November 13, 2011
Banking on tradition; Immigrant communities use old custom of pooling resources to help new arrivals inch toward financial security
New refugees encounter numerous complications when they get here, and some of the most vexing can be financial. A refugee's first few years can be riddled with money issues.
"Basically, they are facing the same financial challenges low-income Americans face but with the added challenges of learning the language and the culture," said Molly Short, executive director of Journey's End Refugee Services.
Low-wages and entry-level jobs are a reality. Opening a bank account can be difficult. And without any credit history, qualifying for any loan can be impossible.
Ma Myint, a Burmese native, and other area refugees have turned to traditional financial customs -- ancient collective systems based on shared trust -- to get a few thousand dollars in times of emergencies.
Myint is disabled and on a fixed income. Her financial situation is so fragile, it's susceptible to any kind of emergency. But it recently withstood her husband's death. Myint paid for the funeral with cash, without cutting corners and without a life insurance payout.
"I don't have money, so I don't have money for funeral," said Myint, a 59-year-old Buffalo resident.
So how did a cash-strapped refugee tackle a costly expense that can blindside financially stable Americans?
She benefited from joining a Burmese funeral club, where a $20 annual membership can give a member up to $4,000 if they experience a death. She got $3,645 in August when her husband died of cancer.
"I don't know what I would do without the funeral club," said Myint, who moved here three years ago with her husband after a decade in a Thai refugee camp. "I couldn't pay for my husband's funeral and burial on my own."
Funeral clubs, microloans funded by small communities and susus -- a type of loan circle -- are some of the financial tools local refugees use to supplement their incomes.
It's the way Steve Setro, a Liberian native barely making it paycheck-to-paycheck, bought his first vehicle -- a $5,000 SUV -- in 2004 without financing. And it's the same way Iraqi native Rasha Al Shaban, who is unemployed, recently furnished her living room with a $1,500 sofa set. It's also how entrepreneur Zaw Win purchased two large washing machines this summer for $1,400 for his business.
Setro, Al Shaban and Win were members of different susus, in which members agree to pay a certain amount into a kitty every month. The money is then given to a different member each month until all participants receive a payment. For example, a 10-person susu with a $100 monthly payment from each would create a $1,000 monthly payment.
Susu is an interest-free, forced savings system or an interest-free loan, depending on the time an individual gets paid during the cycle.
"Before I had only three super-loader washers, now I have five," said Win, who bought the West Side Value Laundromat last year. "More machines is good for my customers. This really helps my business. It's an interest-free loan from my family and friends."
These refugees relied on each other, not banks or credit cards, for economic empowerment. And through their informal, under-the-radar, money pooling efforts, they are gradually meeting their needs and inching toward financial security.
"They are very poor when they get here; they don't have money for a car, security deposit for an apartment or furniture," said Palestinian Amira Khalil, who emigrated to the United States 25 years ago and has been organizing susus with refugees the past three years. "It can really help them get on their feet quicker and start life in this country."
Susus are a fast way to raise capital, and are so common in African, Asian and Caribbean communities that they are often referred to as "immigrant savings clubs." West Africans call them susus. To Jamaicans, it's "partner." Burmese call the groups "maemii." Iraqis call them "jamaeya."
Participants usually hail from Third World nations that don't have structured or trusted banking systems, said Hodan Isse, a UB economics professor and native of Somalia.
"In developing countries, people can't go to the bank when they need a loan, they go to extended family members, close friends," Isse said. "It's community-based, and it's a system that has worked."
The idea of funeral clubs in Burma spawned out of an absence of financial services to cover costs when someone dies. The area's burgeoning Burmese population started a club here last year.
"Our members don't have extra money to pay for life insurance," said Steven Sanyu, director of the Burmese Community Center. "With the funeral club, they pay a membership fee once a year, and if someone passes, we give the money from the membership fees." Sanyu said the club now has 100 members and is growing fast.
"It's something people need," he said. "And since we are Buddhist, our culture is very different when we do funerals. So club members help families and make sure everything is done the way we do it in Burma."
The Burmese community group is one of many developed by refugee ethnic groups to provide emotional and financial support, Short said.
"After refugees have been here a few years, they form these community groups," she said. "And they are really there for each other to address whatever needs that come up and provide assistance."
Sending money back
Along with susus and funeral clubs, hawala -- an informal, money-transferring system -- has long been used by immigrants to get money to relatives in their native countries. But no money is actually sent. Instead, linked couriers pay and borrow from each other to get the money to the recipient for a small fee, settling the debt at a later date.
"It's a very dependable and convenient system, especially in the rural areas, where there are no bank branches," said Dr. Khalid J. Qazi, president of the local chapter of the Muslim Public Affairs Council. "Recipients in rural areas can receive the money at their door at a reasonable cost."
Hawala was once very popular among local immigrants, but its usage greatly declined after the Sept. 11, 2001, attacks. The system was used by the terrorists to get untraceable funds for the attacks.
Government surveillance of the system has forced immigrants to use more expensive wiring services or send money via friends and family traveling to their homelands, Qazi said.
Like hawala, susus operate on trust. There's no credit check, no income verification.
"We only allow nice, honest people in," Khalil said. "People only join through recommendations from current members, and if a new member doesn't pay, the person who brought them is responsible for their payments. But I've been doing this for years and never had anyone not pay."
To avoid that situation, though, family members and close friends comprise susus. The group sizes vary, from a few to 20 people, which then determines the payment amounts and the length of susu cycle. Contributions can be made weekly or monthly. Win's group has 10 people who pay $200 each month. He received $1,800 in August, $200 from each of the nine other members.
Members can choose payment times based on their needs, or selections are done randomly.
"We pick numbers every month, mixed them up, and choose who gets the money," said Khalil, whose group includes Al Shaban and 11 other people who pay $100 a month. "That way people can be surprised, and they can't get discouraged if they know they are the last to get the money. This way they have hope."
In cases of emergency expenses, a member can successfully appeal to get the payment.
"That's the beauty of it -- it's flexible," said Isse, the UB economics professor. "A person can get cash quickly and it doesn't cost them any money."
Isse, who participated in susus when she arrived in America, said money pooling is a great tool as new arrivals find their financial footing. But true financial security can be attained by accessing financial systems and obtaining credit.
An entrepreneur, Khalil has used the money to sustain her various business endeavors. Her $1,600 payment in August paid the tax bills for her three rental properties. And over the years, the money has bought equipment for her photography/videography business, and scarves and jewelry for her clothing operations.
Khalil said past susu members have used their susu payments to start businesses.
Win, 40, got his start through the WEDI program, the economic development arm of the Westminster Presbyterian Church's community revitalization program, which gives training and co-signs for microloans to tiny West Side businesses. The church's program also provided funding for some of the immigrant and refugee vendors in the West Side Bazaar on Grant Street. HEAL International, a refugee-run organization, where Hodan is a board member, also has a microcredit and microloan to help refugees launch businesses.
"Our program appeals to refugees and immigrant entrepreneurs because of the assistance we provide," said Bonnie Smith, president of WEDI. "For someone from a different country, it's hard to start a business. They don't know the language, our business climate, our business regulations or licensing.
"It's also difficult to get financing when you've only been in this country for a couple years."
Win, a former political prisoner who arrived in Buffalo in 2005, said the loan from WEDI and contributions from family members allowed him to buy the Massachusetts Avenue laundromat.
He plans to keep his business going and expand services with future susu money.
"Next time, I might buy two more washers or dryers," he said. "I don't know yet but I know it will help me make my business better."