Tandas in a Recession
In the aftermath of the 2008 financial crisis, Reuters described a group of Mexican colleagues starting a tanda to pool their money to help them navigate through emergencies. The tanda is an informal Latin American term for group lending associations similar to WeTrust’s Trusted Lending Circle product. In the tanda described by Reuters, the membership consists of ten people working at the same steakhouse, who contribute $50 a week. Every time a member’s “number” comes up (i.e. it is their turn to “win the pot”), that member receives $500. The woman described in the article used the payouts from her tanda to “pay off $1600 in credit card debt and take her mother out to dinner on Mother’s Day.”
This article, from the year 2009, mentions that “as the recession shrivels up credit and makes consumers wary of racking up debts, these small savings and credit associations are thriving”. From our vantage point in 2020, with the economy being increasingly damaged by the CovId pandemic and the corresponding lockdowns, many experts believe we are now in a recession that could get worse. With more and more small businesses failing, rising unemployment, and the possibility of bank failures on the horizon, perhaps it’s time to re-examine tandas and similar Trusted Lending Circles like cundinhas (Mexico), juntas (Peru) and pandeiros (Brazil). For many people, these community saving structures provide a much needed lifeline in times of economic distress. For some, tandas and cundinhas are their only way of accessing a savings and loan mechanism. And given the risks the CovId pandemic presents to traditional banking (many people are hesitant to touch the buttons on an ATM machine these days) and to human migration (many people are also hesitant to get on the flight, not to mention the extra hassle of flying during a pandemic), perhaps a blockchain enabled tanda will provide a much needed twenty first century update to these traditional savings structures.
