MUSCAT - Saving or money circles, locally known as 'jammiyat', are collective financial agreements where members contribute to a pool of money with a rotating payout schedule over a fixed amount of time. The practice is widespread in the region, as many prefer it to other means of financing. However, due to its informal nature, the practice comes with many risks.
Local fintech startup Zumr is hoping to provide a solution to this problem.
Speaking to the Observer, Co-Founder and CEO of Zumr, Shamsa al Salami (pictured), explained how the service works.
"Zumr is a microfinance fintech, working under the Central Bank of Oman; it is one of the fintechs that is part of the CBO accelerator programme powered by Omantel," she shared.
The service will allow users to create or join pre-existing money circles online, with the ability to select the amount of monthly contributions, payout dates and the duration of circles.
According to Al Salami, the service will provide two types of circles: closed and open. Closed circles allow individuals to create their own circles and invite members.
"The closed circles allow you to invite your friends and family, create the saving circle and then join it. You will be the admin, you will be in charge of the members you are onboarding." Open circles, on the other hand, will allow users to join circles with unknown participants.
According to Al Salami, the platform will guarantee the security of users’ funds. "We guarantee those members are trusted because we run a background check on every and each member before we onboard them," she shared.
The platform, she said, aims to regulate and organise the practice of money circles.
“Saving circles have existed for almost 2000 years. They are hugely popular, and have become part of our culture. However, they are not regulated and they are not organised.” She continued to explain that a lot of participants of money circles end up not receiving their money back. Additionally, the platform aims to create financial inclusion.
Al Salami stressed that money circles can provide an alternative for individuals who do not qualify for other financing options such as bank loans. The platform is currently in a testing phase and is expected to launch soon.
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