Small Change, Big Chance: Tales from Latin America, Part Two

 

My last post featured a description of a savings product called capitalization. This post highlights another Brazilian financial product, one that cleverly incorporates elements of a savings group, but adds a little thrill.

Formalized ROSCAs* called Consórcios in Brazil are part of the regulated financial system. This photo is of Carlos, a father of two, who lives in one of Rio’s moldering, crime-ridden neighborhoods with a first class view of the city’s shimmering beaches. A sommelier by night, Carlos earns extra cash cleaning motorcyles (motos) onthe weekend. He is also a graffiti artist, teaching classes at the local high-school when he can.

Carlos at one time had been part of a Consórcio of sixty people, each interested in purchasing a moto (motorbike). Members put in $100 every month for sixty months and each month the bank brokering the deal drew a winner who took home a shiny new bike.  As a member, if luck were with you, you won your moto in the very first month and much like a lease you kept paying $100 each month for sixty months to come. If luck were against you, as it was for Carlos, you waited out the full sixty-month term before winning your prize.  Was Carlos pleased that he had saved up for his moto over five years with no debt hanging over his head? “Not really,” he said. “I would have preferred to have had the bike during the time that I waited.”

Consórcios are not just for motos. Members via a bank aggregate to make monthly installments in the hope of winning, sooner rather than later, appliances and gadgets like fridges, cell phones, stoves, and televisions.

The idea of winning versus earning has deep roots in Brazil. The local game of Jogo Do Bicho (The Animal Game) traces its origins to the country’s first zoo in Rio, whose owner, Baron Drummond, needed to raise money to keep the gates of the attraction open. The price of admission was insufficient to pay for all that food for all those animals. Ever the entrepreneur and determined to keep his zoological garden alive, the owner invented Jogo Do Bicho. At the end of each day after all bets had been placed, the Baron Drummond would unveil the winning animal. Lucky players could retrieve their payout of 25 times their wager, or more, right then and right there.

Twenty-five animals represented 25 chances to win. The game flooded like a tide throughout the country, some of it trickling into the coffers of the zoo, but most of it taking on a life of its own as it rushed into every city and town. Strings of parlors cropped up to spread fun and hope.

Visions of the lucky animals come to players in their dreams or appear in their minds as birthdays, or dates of special occasions. Or, if car crashes are your pleasure, merge the license plate numbers at the site of the accident. Does the number include “46,” then bet the elephant.  While officially outlawed by the government (see this 1945 Time Magazinearticle), the game is played everywhere in Brazil and besides profiting the chain owners, proceeds of Jogo do Bicho fund soccer clubs and samba schools. The game is played with gusto, we were told, by the police in Pernambuco.

The lesson for those interested in financial inclusion is that you can play the game for any amount, no matter how small.

As one woman who runs a Jogo Do Bicho stall near Recife reported: “Small change gives you a big chance.” We decided to bet a dollar on the Pig. Though we lost, for a long and pleasing moment, we imagined what we would do with our payout – in this case, $60: We mentally spent it on beer and sandwiches. (Brazil, as we learned, is expensive.)

 *A ROSCA is a Rotating Savings and Credit Association where each week one member receives all deposits paid in by all members. The ROSCA keeps operating until all members have had a turn at receiving the lump sum.