Ever since I lived in South Africa I’ve been fascinated by the concept of collaborative finance – whether it is an institution such as a building society that is collectively owned by its members, peer-to-peer lending websites that eliminate the need to take a loan from a bank, or behavioral schemes that encourage collaborative savings. The fundamental concept behind collaborative finance is the pooling of individual financial resources.
Ever since the Portuguese discovered the sea route to the East Indies (via the Cape of Good Hope) and eliminated the need for long travel along the famous Spice Road connecting Europe & Asia, merchants have been pooling their financial resources to capitalize on business opportunities and reduce risk. This pooling of financial resources was what created the United Dutch Chartered East India Company.
This past week I learned of a new method in which the pooling of individual financial resources was being applied in Yemen. I was on a flight back home from a wedding, and ironically enough ended up reading about how communities in Yemen pool their money together for wedding parties and marry in groups. Weddings are significant in almost every culture, and unfortunately, they are not the cheapest of life events. In fact, without significant savings, they can be a real financial shock to some families. This usually leads to a burden of debt, but not in Yemen. In a country where half the population lives on $1.45 per day and wedding expenses can range upwards of $5,000, I found it very inspiring that members from the same community would come together to pool their resources and marry in groups. Can you imagine the party?