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Monday, November 14th 2022

What Is A Tanda?

Written by

Rafael Bracho

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What Is A Tanda?

Introduction:

What Is A Tanda?

Mexicans have developed a multitude of ways to survive and thrive–several of them are quite creative—and one way that’s getting noticed is a tanda. In this article, we’ll explain to you what a tanda is, why they are common, and why you might want to consider joining a tanda yourself.

Where Does the Word Tanda Come From?

What Is A Tanda?

“Tanda” is a Mexican word that possibly comes from the classical Arabic word, “ḍámdah”, meaning to get hit on the head once. It can also be called a “cundina” in Northern Mexico.

It’s a form of pool between close friends and family members—people who trust each other in financial matters. It’s a common practice in developing countries in Latin America and Asia. They are also known by many other names:

  • Paluwagan in the Philippines
  • Esusu in Liberia
  • Susu in Tobago
  • Asusu in Benin
  • Hui in China and Vietnam
  • Chit Fund in India
  • Hagbad in Somalia
  • Stokvel in South Africa
  • Gam’eya in Egypt
  • Pandeiros in Brazil
  • Tanomoshiko in Japan
  • Gye in Korea
  • Tiganesc in Romania
  • Arisan in Indonesia
  • Menodge in Scotland
  • Dhukuti in Nepal
  • Cuchubál in Guatemala
  • Ekub in Ethiopia
  • Kametia in Pakistan
  • Chama in Swahili
  • Visi in Gujaratis

What Is A Tanda?

What Is A Tanda?

A tanda is a Rotating Savings and Credit Association (ROSCA). In short, friends and family get together once a week to pool together a predescribed portion of their paychecks. Then one of them gets the pot for the week.

It’s a way for people to save funds where it would traditionally be difficult to save up the money. Also, it can act as a loan because you will likely get the portion of the pool in less time than it would take to save up the money using the same amount from your paycheck.

  • An Example:

Say 12 people got together to contribute $100 dollars of their paycheck. They would select their names out of a hat to determine the order in which they were paid out. Then, once every 3 months, one of the members of the tanda would receive $1,200.

A tanda might repeat in order of payouts; or it might reverse in order, so that the last person would be the first person the following week (therefore the last person would receive $2,400 in two weeks.)

Online Tandas

What Is A Tanda?

There are some online solutions that have tried to break into the tanda market. Several crowdfunding forums have been the most reliable solutions. Yahoo even had an app called “Tanda”, but it’s now defunct. There’s another app called MoneyFellows which seems to have taken its place. These online apps provide a measure of convenience and security for a price.

In many cases, these haven’t been successful for three reasons. The first is that they require fees—which is a percentage of the payout. The second is that they seek to overthrow a system which has stood in place for decades. And third, it requires that the person have a phone/computer and internet connection—whereas one doesn’t even need to be able to read to join a traditional tanda.

Pros and Cons of a Tanda

What Is A Tanda?

There are many pros to being in a tanda, but there are also cons.

  • Pros
  1. Studies have shown that missed payments are rare
  2. You get to know that you’re helping your friends and family—especially if you’re financially set
  3. There are some online options that have safeguards
  • Cons
  1. There is a risk that you won’t get paid
  2. You could affect the relationships with your friends and family
  3. Online versions come with fees that take away from the whole point of an interest-free loan

Libertarian Socialism in Action

What Is A Tanda?

A tanda is a form of libertarian socialism in action. No, libertarian socialism is not an oxymoron, it’s a form of leftist economics that rejects institutional and state controlled social welfare programs. It advocates decentralized political organizational structures—seeking to put social programs in the hands of the people who benefit from these solutions.

Because a tanda is an economic solution run by the people, for themselves, and without state control or taxes, thus, it would be a form of libertarian socialism.

Conclusion

What Is A Tanda?

In conclusion, tandas are a necessary, grassroots solution to the challenges of raising money in developing countries. They provide a valuable service to people who struggle the most—making their money work for them.

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