International Journal of Empirical Finance

Vol. 4, No. 4, 2015, 206-214

Participation in the Tontine: Profiles and Determinants,

Microeconometric Analysis Applied to Moroccan Data

Aomar Ibourk1

Abstract
In Morocco, the banking rates remain generally at unsatisfactory levels, with the exclusion of a large part of
population from the formal financial systems due to purely religious reasons as well as its complexity and
costs. This exclusion practiced by the modern financial systems leads people to opt for other alternatives,
such as tontines, that go along with their religious beliefs and financial needs. The current article aims to
analyze the determinants of participation in tontine through mobilizing data from a survey conducted on a
sample of 453 teachers of middle school (lower secondary level) in Marrakech. Our analysis highlights three
major variables that were rather anticipated (sex, marital status and age) as well as another variable that
depends on the teaching subject or specialty of the teachers. This analysis allows, amongst others, to shed
light on the substantial costs to the Moroccan economy because of the absence of the Islamic financial
institutions and micro-finance, which can deliver socially accountable products to compete the practices of
tontine in the informal sector. All that we can say so far in terms of the competition between the two
financial systems, informal and formal, is that the first system is the one that expands fundamentally in the
Moroccan case.
Keywords: tontines, profile, determinants, micro econometric analysis
JEL: D14, C25, G21

1. Introduction
In the last few decades, microfinance has been able to grow rapidly around the world and particularly in
the developing countries. This has hugely renewed the interest of the economists, who attempt to measure its
impact on the eco-social development of the poor population to which it was originally planned. It is in this
context that we have witnessed the creation of new microcredit products and micro finance institutions. The
latter have experienced an unprecedented success in some African and Asian countries recording a
significant change in the world of finance, and failure in other countries as is the case in Morocco. Today, the
issue of savings mobilization in developing countries continues to be a serious issue for both international
institutions as well the national authorities, which strive to prevent the informal economies to dominate. In
Morocco, conventional banks have not fully succeeded to cater for the savings of the population, nor have
been able to use the collected deposits efficiently to finance investment projects dedicated to fostering the
development of the national economy (LELART 1990). The absence of the Islamic microfinance and
financial institutions in Morocco that are likely to offer suitable loans to people with exceptional or
temporary financial difficulties with lower interest rates that does not burden their purchasing power, has
resulted in the exclusion of many people from the formal financial system. This has turned instead to the
benefit of the informal sector. The unequivocal offer of the Moroccan conventional banks is considered
extremely expensive because of the interest rates that should be paid. Practitioners have attributed it as
"Haram" that is forbidden by Islam which strictly prohibits the payment of interest for whatever reason. The
Moroccan banking system requires a reform in order to formalize the financial structure to address the gaps

1
Professor of Economics, University of Marrakech Director of GRES: Research Group of Social Economics, Cadi
Ayyad University, Marrakesh, Morocco

© 2015 Research Academy of Social Sciences

http://www.rassweb.com 206
 International Journal of Empirical Finance

that constitute a loss of revenue to the national economy. From this perspective, we can say that the
development of informal finances is not the product of a spontaneous economic phenomenon. It is based, on
the contrary, on the frustration of the population and insufficient and unsatisfactory banking offers. This is,
indeed, a result of a set of socio-economic dysfunctions marked by the exclusion of the poor and middle class
"pulled downward" the formal financial system. This exclusion also reflects the inability of the state to
provide help to the disadvantaged populations.
In order to cope with real life needs, households opt for the financial alternatives setting up funding and
organizational strategies that fit their needs, financial conditions and religious convictions. We have found in
this sense two well-known practices, namely "love money" which means “the capital given by relatives or
friends to an individual to start personal business. The loan is generally refunded in a short term and does not
require any payment of interest on capital. The second practice is the "tontines" which are the main theme of
our study. This practice of informal finance is universal. The empirical studies that have been carried out to
explain and measure the impact of this phenomenon on the social and economic plan have shown that people
of different nationalities agreed on this solution whenever the need for financial resources is present. It is
also a way to create funds from savings for potential investment projects especially where access to credit is
difficult and the social security is virtually absent.
Anderson, Moene and Baland (2003) have shown that it is possible for an individual to choose between
a savings accumulation by participating in a tontine association according to his or her position and savings
by resorting to his or her own means. In this work, we try to analyze the determinants of the participation in
the tontines and, at the same time, to verify the underlying assumption that religious beliefs are crucial, by
applying discrete choice econometric models. At the methodological level, this contribution constitutes, to
our knowledge, the first application of this approach in this field. At the analytical level, the results of this
work come to complement the few descriptive works that are often made. This paper is organized as follows.
In the next section, we will try to analyze the informal financial practices of tontine associations. The third
section will be devoted to the presentation of the adopted methodology as well as the results. The final
section is a conclusion.

2. Tontine Associations and Informal Financial Practices

Tontines or tontine associations is a phenomenon that dates back centuries, which astonishingly knows a
large expansion in the developing countries of Africa, Asia, and Latin America. The tontine phenomenon has
such long remained unrecognized but started to grow after the failure of the banking and financial systems in
many developing countries. It is through F. BOUMAN in the 70s that the tontines have found a name and a
more scientific explanation: Rotating Savings and Credit Associations (ROSCAs or AREC in French).
Followed by several economists and the World Bank that has devoted to this phenomenon an entire chapter
in its annual report on the development of 1989.
At this level, it is appropriate to define the tontine which is an association of individuals who are related
by kinship, friendships, profession, clan or region, that are found themselves in a more or less variable
intervals, gather their savings in order to solve individual or collective problems. This definition is similar to
that given by BOUMAN (1977) who has described "the tontines as associations grouping members of a clan,
family, neighbors or individuals, who decide to pool goods or services for the benefit of everyone, and this in
turn ".2
The most basic form of the tontine consists of a blended formula of savings and credit that functions as
follows: participants pay regular fixed amount of contributions to a common fund, which is distributed in
turn to each of the members designated in general by drawing lots. When each member received the funds
once, the cycle should normally restart. It is noteworthy that the first member to receive the fund has an
interest-free loan, while the latter receives savings throughout the cycle without being paid (or even a

2
M.Gasse-Hellio, tontines in developing countries, University of Versailles Saint-Quentin-en-Yvelines, p1
207
 A. Ibourk

negative interest rate if inflation is high ) to get by the end the same amount s/he would have accumulated
through a regular saving on an individual basis. The other members are, according to their rank access to the
fund, in the position of debtor or creditor. Their participation, nevertheless, allows them to benefit from the
total sum more than if they had saved themselves.3 Tontines exist almost everywhere in Africa under various
names. Known under similar names in other continents. In Sri Lanka, for example, they are called "cheetu",
"chittfunds" in India, "adjolu" in Benin, "Sosiyete" or "Ikinina" in Rwanda, likelemba or "ristourne" in the
DRC. They have existed in China since the ninth century under relatively sophisticated forms with auction
(neibiao).4
The Moroccan tontine is a rotating and not cumulative tontine, it is known as the "Dart" in some areas
and "Qoraa" in others. This is a group of people who decide to pool their savings by making quasi-fixed
contributions. Generally, the payment of contributions as well as the "lifting" of funds are made monthly but
it can be a weekly lifting when participants opt for a shorter duration. The total funds are placed each time,
on the agreed time, at the disposal of a member in turn (DEVOUE, 2000). Finally, the received funds are
generally allocated by random draw, either at each period or more often at the beginning of the "cycle". The
use of these funds is generally free. Tontine includes, in most cases, both sexes, although the number of
women is higher than that of men. It is organized and often takes place in the place of work of the members.
It is almost never constituted within a registered association, even if it has a "head office", but it never
possesses written or formal statutes.
The model of the tontine practiced most of the time in Morocco is relatively of recent creation whose
establishment often results from an initiative by one or more women, led by a need for specific funding or
just by the desire to build a savings to face the contingencies of life. One of its creators becomes responsible
and guarantor of its good functioning. Recruitment of participants, far from being arbitrary, is done on the
basis of their recognized honesty which is a determining factor, but also on their financial situation, as there
is no declared document to protect themselves against a possible scam. Neither age nor ethnicity seem to be
determining criteria for the recruitment of members of the tontine.
The concept of rotating savings and credit associations (tontines), as the informal finance practice, has
been the subject of several studies in Africa during the past two years without realizing advances at the
empirical level. The lack of unanimity of results and explanations is attributed to the difference in the
countries of origin of researchers seeking to explain this phenomenon and its evolution by environmental
variables, cultural ones and others by field experiences from the latter.
According to the study by Duranthon et al (2003), this tontine practice has always existed in Senegal
and in several developing countries taking various forms as well, although since the early 80s the number of
participation and practice has largely increased. Thus, we have witnessed an innovative creation adapting to
the needs of the Senegalese population: between tontines of neighborhoods, of market and of companies,
there is no lack of choice. Tontines are divided into two groups, we find the traditional solidarity tontines
practiced in rural areas and the urban tontines, distinguished by their sophistication, that appeal to more
resources. According to Duranthon, Gizon and Virginia (2003), tontines allowed the meeting between
capitalist logic and solidarity.
Coexistence between formal and informal financial sectors in developing countries is a reality to which
a solution must be found. Indeed the need to regularize the second is heavier than facilitating the granting of
short-term credits to important preferential rates in a solidarity perception should limit leakage in this sense.
According to Fournier and Giguère, 1993 highlighted the cohabitation of this financial dualism and were able
to show that during the 90s Senegalese commercial banks could mobilize only 10% of the country's
workforce.

3
M.Gasse-Hellio, op cit, p1
4
F.Vincent, Financing associations differently and third world development NGOs, volume1, IRED, Geneva, 1994,
p112
208
 International Journal of Empirical Finance

In this sense, Lanzarotti (2006) also has stated that the coexistence of informal finance or informal
economy by the side with the formal sector is manifested by the ignorance where are economic agents, as to
the availability of suitable products or the need to submit to a regulation, which will be doubly be beneficial
at both microeconomic and national levels. In the absence of an effective public management, informal
activities in these countries take place openly on public places. The necessity to regulate the informal sector
is of great importance.
Other variables have participated in the emergence of tontine practices in developing countries. We find
the structural adjustment programs (SAPs) as the main factor to which these countries were submitted, they
were intended to boost the whole economy but also improve the situation of women, among others through
setting up social programs to meet the specific needs of the most disadvantaged populations (Fall, 2007).
However, despite these goals that seemed promising at first, these programs have had almost the opposite
effect to the expected one, they have in fact marginalized women by limiting the necessary means for their
emancipation and economic development (Duranton and coll., 2003). According to these researchers, the
unfavorable environment in which women were left, which actually aroused their willingness to change the
circumstances and was translated into organizations in the form of rotating tontine associations to face this
situation, which is characterized by the economic insecurity. According to Duranthon, and coll (2003),
tontines are then appeared as short-termists solutions to face financing problems; they positioned themselves
as a bridge between the failure of these adjustment programs and the needs of personal and social financing
of women. Tontine associations represent basic organizations that promote the social development of
participants through the establishment of profitable projects either financially or personally. In this sense the
members invent, in their quest, different financial resources and organize themselves in common meeting
places which generally serve as a pretext to exchange personal and professional experiences (Sarr, 1998). To
the present time, these informal financial associations mark the economic landscape of many underdeveloped
countries in Africa, Asia and Latin America and are also widely present in developed countries, but to a
limited extent.

3. The Determinants of the Participation of the Tontines: An Empirical Analysis

 Data and Methodology
o Data
The target population of this research includes 453 middle school teachers working for 26 public
schools of which 24 are in urban areas and 8 in rural areas. The exploited data is a representative sample of
middle school teachers (lower secondary level) in Marrakech.
Table 1: Sample Description
Pourcentage
1.Gender
WOMEN 47,5
MAN 52,5
2. Family Situation
single 10,8
Divorced 1,3
Married 86,3
Widow 1,5
3. environment
RURAL 32,2
URBAN 67,8

209
 A. Ibourk

 Methodology
In methodological terms, the approach used is presented in two stages:
- In the first stage, we estimate, on the basis of individual data, a probabilistic model whose dependent
variable Zi is dichotomous (the decision of whether or not to engage in the tontines). We have relied on two
types of independent variables: the individual variables and the socio-demographic ones. The estimated
model is the following:

 
Pi  ProbZi 1   X i    X i  , whereby Pi is the likelihood of opting or not to conditional
tontine at Xi , 
. is the error term of the distribution function  and  is a parameter vector to be
estimated.
- In the second stage, we estimate a probabilistic model whereby the dependent variable Zi is
dichotomous (is opting for tontines is driven by a religious reason or not).

4. Results
o Descriptive Analysis
Before we start the discussion of results of the tested regressions, we highlight that the results of the
bivariate analysis are significant. Tale 2 illustrates that gender is one of the variables. The calculated
Chi_deux becomes 75, 35 which largely exceeds the theoretical khi deux within 1 degree of freedom. The
independence hypothesis is rejected with a risk of errors of 1%. The rate of 58, 8% of the participants in the
tontine are women.

Table 2: The gender of the Participants in the Tontine

You participate in tontine?
no yes Total
.WOMEN effective 13 202 215
% Included in SEX 6,0% 94,0% 100,0%
MAN effective 98 140 238
% Included in SEX 41,2% 58,8% 100,0%
Total effective 111 342 453
% Included in SEX 24,5% 75,5% 100,0%

The following results are similar to those obtained of other studies in Africa.
It appears that being a member within a tontine requires some criteria. Some of these are the variables of
trust, economic situation, and belonging to the same establishment with the rates of 32%, 11, 1%, and 7, 3%
respectively. Followed by other criteria that seem with less importance, according to the obtained results,
such as being regular, being a teacher in the same establishment and having a fixed income. We have noticed
that the geographical zone has no significant effects on the participation of teachers in the tontine. This
allows us to conclude that these are two independent variables. It is of high interest to mention that the
selection of participants is as important as the choice of the head office. It is simply the person charged to
collect the savings from other adherents and to raise the funds for the benefits of a participant. The results of
our survey, as quoted in Table 3, have confirmed that people prefer women as managers for trust issues and
their close relationships with other participants, which may result in better management of fund-raising
missions.

210
 International Journal of Empirical Finance

Table 3: The Gender of the Preferred Manager

Effective %
Women 222 64,9
Men 120 35,1
Total 3425 100,0

The majority of the participants in the tontine are “quite satisfied” of the whole operation and are ready
to recap the experience for a second time. Only 43 people out of 342 participants who have been
disappointed or not at all satisfied. Those represent a minority of 12, 6% (see Table 4).

Table 4: The Rate of Satisfaction of Tontines

Effective %
Not at all satisfied 43 12,6
Somewhat satisfied 48 14,0
Very satisfied 251 73,4
Total 342 100,0

The intensity of participation in tontines remains higher. Over than 32% of participants are involved in
more than one tontine per year (see Table 5).

Table 5: The Number of Tontines per year

Effective %
1 231 67,5
2 86 25,1
3 25 7,3
Total 342 100,0

People tend to opt for this alternative due to the absence of microfinance and Islamic products that go
hand in hand with their requirements and their religious beliefs (see Table 6).

Tableau 6: Tontines Participation Motivations

%
Other motivations 26,3
Religious belief 73,7

o The Results of the Econometric Analysis

Generally, the regression results of the first model of our research have shown that the participation in a
tontine attracts women more than men, with no significant regional differences. This confirms that the
tontine associations have a feminine nature. This phenomenon might be explained by the strong
determination of women to improve their living conditions (see Table 7).

5
Représente le nombre de personnes qui participent à des pratiques tontinières
211
 A. Ibourk

Table 7: Results of Logistic Regressions

Modèles Variable Participation in the choose tontine for a
tontine. Religious Reason
Variables coefficient
1.Age
Age -0.0434 -0.0657*
(0.0478) (0.0388)
2. Seniority
Seniority -0.0146 0.00801
(0.0425) (0.0352)
3.Gender
man réf réf
woman 2.278*** 1.084***
(0.327) (0.212)
4. Familiy Situation
Married and other situations réf réf
single -1.257*** -0.798**
(0.451) (0.369)
5.Echelle
E9 ref ref
E10 0.899* 0.901**
(0.537) (0.423)
E11 0.366 1.174**
(0.602) (0.493)
6.Milieu
Rural réf réf
Urban 0.221 0.0121
(0.297) (0.243)
7. Already enjoys the housing credit
beneficiary -0.640** -0.622***
(0.267) (0.220)
8. subject taught
Literary matters (Arabic, French, réf réf
History geo)
scientific 0.110 -0.419**
(0.263) (0.211)
Islamic Education -1.083* -0.299
(0.626) (0.556)
Constant 2.490* 2.069*
(1.388) (1.115)
Observations 453 342
Standard errors in parentheses
*** p<0.01, ** p<0.05, * p<0.1

Participation in a tontine concerns more young teachers who invest in their lives than older teachers. We
can explain this lack of interest in the tontine for older teachers by certain saturation and financial affluence
at the end of their career. The family status is also a crucial factor in the participation in the tontines. Indeed,
being married or divorced increases the chances of participation, while single people tend to be less
interested in this. The teaching school subject is a key element in the process of participation. Teachers of
212
 International Journal of Empirical Finance

French, English, History and Geography tend to adhere to a tontine more than others. The findings of the
second model are broadly in line with the first ones. These results have indicated that women have a greater
religious conviction than men. At the same time, teachers of literary subjects are the most involved in the
Moroccan tontines for religious reasons. These results confirm the assumption that people have a tendency to
opt for this alternative in the absence of microfinance and Islamic products that are consistent with their
religious beliefs and needs. Such exclusion from the formal financial system has given birth to tontines as a
suitable microeconomic solution. This shortfall is a substantial loss to the national economy as long as the
informal sector is still growing before the eyes of the authorities and in public without finding a way to
regulate it and make it beneficial at the macroeconomic level ensuring the continuity of dualism.

5. Conclusion
This article has attempted to identify the key factors of taking part in the tontines and the impact of the
religious beliefs on this choice. This community investment fund that was established mainly for solidarity
reasons has been able to show its effectiveness in disadvantaged areas and elsewhere. We can clearly say that
the tontine associations in Morocco represent a social approach for community economic development that
compensates the lack of Islamic financial institutions potential to offer products adapted to the specific needs
of Moroccans. The current research has allowed us to identify more clearly the determinants of participation
in the tontines such as gender, family status, age, and the teaching subject or specialty of the teachers. These
determinants may serve to provide guidance for Islamic banks to come to offer appropriate products for each
category. It appears eventually that despite not belonging to a disadvantaged population, people in general
opt for tontine associations to achieve their professional of individual objectives by undertaking savings or
going into debts. This collective operation is done through the implementation of an agreement based on trust
as well as a community principle of solidarity amongst the members under the supervision of a manager. The
latter’s duty is to ensure a more efficient allocation and fundraising activities and optionally to deal with
conflicts and the risks of non-payment and delays.
The decision to opt for the tontines is done on the basis on the religious conviction. It is due also to the
ignorance of the participants of the existence of certain financial products that can meet their needs. It would
be of high interest to conduct a research on the tontine associations in Morocco after the establishment of
Islamic banks to measure the impact of the Islamic product offer, which does not involve an interest
payment, on the individual choice and to analyze thereby the efficiency and the accessibility to banking
services. We can now confirm that the Moroccan tontine associations are effective tools for the mobilization
of forced savings, over specific periods, and can ultimately serve to significant disbursements. It would be
also interesting to see how successful the completion of this financial transaction is due to relatively few not
important conflicts.

References
Balepa, M., et Roubaud, F. (2009). « Le secteur informel et la pauvreté en Afrique: instrument de mesure,
analyse et politique économique », Le Journal statistique africain, no 249.
Dupuy, C. (1990). « Les comportements d'épargne dans la société africaine: études Sénégalaises », dans
Lelart M. (éd.) La Tontine : pratique informelle d’épargne et de crédit dans les pays en voie de
développement, London, John Libbey Eurotext, p. 31-51
Hellio, G. (2000). « Les tontines dans les pays en développement », Université de Versailles Saint –Quentin
–En- Yvelim
Joseph Fritzne, (2009). « Les tontines haitiennes: Historique et microéconomie des institutions financières
informelles », édition le manuscrit.
Lelart, M. (1990). « La tontine, pratique informelle d’épargne et de crédit dans les pays en voie de
développement », UREF, collection science en marche, Eurotext.
213
 A. Ibourk

M.GASSE-HELLIO, « les tontines dans les pays en développement », Université de Versailles Saint-
Quentin-en-Yvelines, p1
Michel DROMAIN, Les Associations rotatives d'épargne et de crédit au Sénégal, thèse pour le doctorat en
Sciences de Gestion, I.A.E. de Nice, Juin 1989.
Michèle ODEYE, Le phénomène associatif en villes africaines (Dakar-Brazzaville), Archives de Sciences
Sociales de la Coopération et du Développement, n° 66, Octobre-Décembre 1983, pp. 46-53
Seynabou Diagne (2013). « Tontines et empowerment des femmes au Sénégal Le cas des tontinières du
marché d’ Habitations à Loyer Modéré (HLM) Nimzatt à Dakar », mémoire pour l’obtention d’un
Master, université Laval.
DEVOIZE (1985). « Des économies dualistes : les secteurs informels», Projet, n° 162, Février 1982 in :
Comprendre l'Économie africaine, textes choisis et présentés par Frédéric GAGEZ, Bibliothèque du
Développement, l'Harmattan, Paris, p. 312.
Tremblay, P.A., et Tremblay, M. (2007). « Organisation communautaire, développement social et lutte
contre les inégalités à Saguenay ». Dans D. Bourque, Y. Comeau, L. Favreau et L. Fréchette (éds.).
L’organisation communautaire. Fondements, approches et champs de pratique, Québec, Presses de
l’Université du Québec, p. 153-166
VINCENT, F. (1994). « Financer autrement les associations et ONG de développement du Tiers Monde »,
volume1, IRED-Genève, p112

214