African diaspora communities across Canada sustain one another through collective saving, food sharing and emergency support. But despite their social and economic value, these co-operative practices are often mischaracterized as fraudulent or criminal.
Many Ethiopian Canadians still practise equb (communal rotating savings), idir (informal loans), kircha (meat shared from thepooled purchase of an animal) and mehaber (groups that meet for religious, social and economic support). Somali Canadians organize hagbad. Ghanaians use susu. Variations have operated for generations across West Africa, the Horn of Africa and the Caribbean.
These traditional approaches are not cultural holdovers. They are being used in modern ways to build financial networks that help stabilize income and build assets. And they help address challenges newcomers face in dealing with banks and loan companies.
Misunderstandings about how these community economies work can lead to conditional belonging – legal status in the country without true economic inclusion. A few targeted regulatory changes could help guarantee a genuine sense of acceptance.
The problem
Newcomers to Canada face precarious employment and income instability. Credential barriers and discrimination push many into low-wage sectors. Government-assisted refugees receive income assistance for one year. Privately sponsored refugees depend entirely on sponsors.
Ethiopian Canadians try to counter this exclusion by retaining a collective approach through churches, kinship ties and community groups. Research shows how these networks provide access to financial resources and information. They also make it possible for newcomers to send money to family members still in Africa.
Kircha traditionally involves collectively purchasing a cow or sheep and dividing it into equal portions. It allows households to buy, at lower cost, high-quality meat that is culturally important and appropriately prepared. Studies show kircha reduces exposure to retail price volatility by buying food directly from suppliers. In the context of rising grocery prices, kircha should be understood not simply as a cultural tradition but as a community-based way to ensure food security.
Equb functions as a rotating savings and credit association. It offers a more stable standard of living and helps amass capital for households with inconsistent income or restricted access to formal credit. These associations help invest in education and entrepreneurship while fostering trust.
But the informal nature of equb presents challenges when dealing with banks. Lump-sum deposits can arouse suspicion during mortgage applications. Prospective homebuyers often face demands for extensive documentation or skepticism about their savings. This illustrates how regulations can inadvertently penalize collective savings.
Idir and mehaber address financial and social needs during vulnerable life events. Idir provides financial help for funerals and emergencies, thereby easing the significant burden of burial costs. Idir also co-ordinates the return of a deceased to Ethiopia, ensuring culturally appropriate burial. Beyond immediate funeral assistance, idir encourages proactive planning by raising awareness of life insurance, seniors care costs and formal savings tools such as the Registered Education Savings Plan (RESP). Mehaber offers social and spiritual support during major life transitions, including marriage, childbirth, illness and loss.
Together, these concepts serve to protect a community by providing consistent access to basic needs and building security for households post-migration.
These co-operatives are almost always organized and sustained by women, who use them to build financial independence and pathways to housing. Scholarship on Black mutual aid documents how rotating savings groups operate within racialized communities. The principles are always the same: regular contributions, alternating payouts and deep trust.
But that trust does not translate to the formal world of banking. Financial institutions may flag a transaction for an anti-money laundering review when a lump sum is deposited. Mortgage lenders demand documentation not required by rotating savings groups. The result is loan applicants are questioned, treated as potential fraudsters or denied services. This is exclusion.
What needs to change
Canada’s financial authorities, housing agencies and immigration decision-makers must take steps to recognize community-based savings as legitimate. These changes require some regulatory guidance, policy co-ordination and political will. They include:
- Accept rotating savings as a legitimate down payment source: The Office of the Superintendent of Financial Institutions (OSFI) should issue national guidance requiring federally regulated lenders to accept documented participation in equb, hagbad, susu or similar. Lenders already accept gifts from family members who are willing to sign a gift letter. A verified savings history from a rotating credit association is no less reliable. This would end the arbitrary rejection of collective savings and give lenders clear rules to follow.
- Create a way to verify collective savings: The Canada Mortgage and Housing Corp. (CMHC) should establish standard documentation for rotating savings used for insured mortgages. This would include templates for group leaders to certify participation, guidelines for lenders to assess savings patterns and a clear definition of what constitutes acceptable evidence.
- Monitor racialized financial profiling: The Financial Consumer Agency of Canada should track complaints related to account closures and to loan denials linked to rotating savings. Banks should be required to disclose how they assess collective deposits and whether these evaluations disproportionately affect racialized communities.
- Incorporate community financing into settlement programs: Immigration, Refugees and Citizenship Canada should ensure that settlement services include financial advice tailored to newcomers who rely on rotating savings. This should include mortgage readiness training, guidance on how to document savings and lists of lenders who understand these practices. The department already funds settlement organizations. This would be a modest addition to existing programs.
- Support community economic infrastructure: Provincial and municipal governments should provide small grants for co-operative purchasing, access to licensed community kitchens and partnerships with diaspora organizations. Toronto’s Banker Ladies offer a model of small-scale support for existing mutual aid networks.
The stakes
Thousands of newcomers in Canada — particularly women — are saving, investing and building stability for themselves. One Ottawa woman, a single mother who arrived as an asylum-seeker with no family in the country, used an equb to save for rent, groceries, back-to-school clothes, Christmas presents and, eventually, a down payment on a home. That woman was my mother.
Canada has a choice. It can continue to force newcomers to work around financial barriers because banks treat their collective savings as suspicious. Or it can recognize cultural practices that save and raise money as legitimate means that should be supported.
Recognition is not a favour. It is the difference between conditional belonging and genuine economic inclusion.
