Ajo, Esusu, and the next wave of digital savings circles

For decades, the sound of money hitting a table in someone's living room in Yaba, Kano, or a village outside Ibadan has been the heartbeat of Nigerian finance. No apps. No interest rates printed in white text on a blue background. Just trust, discipline, and the collective agreement that when it's your turn, you eat.

That system—ajo, esusu, susu, or whatever your grandmother called it—still moves billions of naira every year across Nigeria. And now, for the first time in the country's fintech history, the digital versions are actually working. Not as a replacement for the old way. As an upgrade to it.

This article walks you through how digital ajo and esusu platforms are reshaping savings in Nigeria, why the unit economics work where they didn't five years ago, and where the real money is for founders willing to build beyond the app store.

The old system still works. That's the problem.

Ajo operates on a principle so simple it survived colonialism, military rule, and the 2008 financial crisis: a group of people (usually 5 to 50) agrees to save a fixed amount weekly or monthly. Each meeting, one person takes the entire pool—the "pot." The next meeting, someone else takes it. By the time the circle completes, everyone has saved and received a lump sum.

In a typical Lagos ajo circle of 20 people saving ₦50,000 monthly, the pot is ₦1 million. Over 20 months, each member gets ₦1 million, having paid in ₦1 million themselves. No interest. No profit for the organisers. Pure mutual aid.

The system survives because it solves a problem that formal banking has never truly cracked in Nigeria: how do you help someone save when they earn in dribs and drabs, when they lack collateral, and when they need the money in one lump sum—not spread across a savings account statement?

But the old system has three killers:

1. Trust friction. If the circle organiser (the iyaloja, the market leader, the workplace supervisor) vanishes with the pot after month 15, you're finished. This happens. It happened to someone you know.

2. Geographic lock-in. You must attend meetings in person. Miss one, and you might lose your place. If you move to Abuja for work, you're out.

3. No optionality. Once you're in, you're committed. Emergency? Job loss? Tough. You still owe the circle.

These aren't small frictions. They're the reason millions of Nigerians still use ajo—but also why they've been waiting for a digital version that actually works.

Why the first wave of apps failed

Between 2015 and 2022, at least a dozen startups tried to digitise ajo. Most are gone or dormant.

Their mistakes were predictable:

• They tried to remove trust. They added interest, fees, or algorithmic matching. Ajo users don't want interest. They want certainty. They want to know exactly who they're saving with.

• They built for scale before they understood unit economics. An ajo circle of 20 people needs almost no infrastructure. A platform managing 50,000 circles needs payment rails, dispute resolution, customer support, and fraud detection. The first wave tried to do both simultaneously.

• They ignored the social layer. Ajo is not a financial product. It's a social contract. The app is just the medium. The first wave built apps. They didn't build communities.

• They didn't solve for cash-out. If you win the pot, you need to withdraw it the same day. If the platform takes 48 hours to process, you'll go back to physical ajo.

The second wave: Ajo and Esusu get it right

Ajo launched in 2021 with a simpler thesis: don't replace ajo circles. Digitise them.

Here's what they did differently:

1. They kept the social structure. You still form circles with people you know (or choose to trust). The app doesn't match you algorithmically. It's your network, your rules, your circle.

2. They solved for speed. When the pot is drawn, money hits your wallet in minutes, not days. This is non-negotiable in Nigeria.

3. They embedded payment rails. By integrating with Paystack, Flutterwave, and direct bank transfers, they removed the friction of collecting cash physically. Contributions happen via USSD, app transfer, or bank debit. No one needs to show up with an envelope of naira.

4. They stayed lean on features. No interest. No investment products. No complex algorithms. Just circles, pots, and withdrawals.

Esusu (founded around the same time) took a slightly different angle: they added a credit layer. After you've completed a circle with Esusu, you can borrow against your savings history. This works because the platform now has data on your repayment discipline—you've already proven you can commit to a financial obligation for 20 months straight.

Both models are working. Ajo has processed billions of naira in circles. Esusu has moved into lending. The unit economics are positive because the core product is simple: take a small commission (usually 1-2% of the pot) and scale horizontally.

Why this matters now, in 2026

Three shifts have made digital ajo viable when it wasn't five years ago:

Mobile money penetration. In 2020, maybe 40% of Nigerians had easy access to a smartphone and data. By 2026, it's closer to 70%, especially in cities and secondary towns. Kano, Benin, Enugu—markets that looked too risky in 2018—are now addressable.

Payment infrastructure. Paystack, Flutterwave, and Moniepoint have made it cheap and fast to move money between wallets and bank accounts. A transaction that cost 2% five years ago now costs 0.5%. That margin matters at scale.

Regulatory clarity. The CBN's fintech guidelines (updated in 2023) clarified what a digital savings platform can and cannot do. The ambiguity that killed early startups is gone. Founders now know the rules.

Where the real opportunity is

The biggest mistake founders make is thinking digital ajo is a consumer app business. It's not. It's an infrastructure business.

Here's why: a single user is worthless. You need circles. A single circle is worth something, but not much—maybe ₦20,000 in annual commission on a ₦10 million circle. But 10,000 circles? That's ₦200 million in annual recurring revenue. And 10,000 circles is manageable infrastructure.

The real opportunities are:

1. Vertical integration with employers and cooperatives. Ajo circles thrive in groups with existing trust: workplaces, market associations, churches, professional bodies. If you can embed ajo into an employer's payroll system or a cooperative's management software, you've got distribution and data. This is where Moniepoint is winning—they're not just a payments company; they're integrated into traders' daily workflows.

2. Cross-border ajo for diaspora. A Nigerian in London wants to save with her family in Lagos. A Ghanaian trader in Accra wants to run a circle with suppliers in Kumasi. Digital ajo removes geography. The commission on cross-border circles is higher (you're solving FX risk), and the customer acquisition cost is lower (diaspora Nigerians are digitally native and willing to pay for convenience). This ties directly into how diaspora Nigerians actually send money home in 2026—they're not just remitting; they're saving collectively.

3. Rural fintech bundling. The opportunity in rural fintech in Nigeria isn't a single product. It's a bundle. Ajo + insurance (cover the circle if someone dies), ajo + micro-credit (borrow between circles), ajo + input financing (save for farming season, then borrow for seeds). OPay and Kuda are already experimenting with this. The founder who gets the bundle right in a secondary market (say, Kano or Oshogbo) will have defensible unit economics.

4. B2B2C through microfinance banks and SACCOs. Microfinance banks and savings and credit cooperatives have millions of members who already trust them. If a digital ajo platform can white-label for these institutions, you've got instant distribution and regulatory cover. The commission split is lower, but the scale is exponential.

The unit economics that work

Let's walk through a real scenario:

Circle size: 20 people Monthly contribution: ₦50,000 per person Monthly pot: ₦1,000,000 Duration: 20 months Platform commission: 1.5% per pot (₦15,000) Revenue per circle: ₦300,000 over 20 months

If you can acquire and manage 500 active circles (10,000 people), that's ₦150 million in annual revenue. Your cost structure:

At 500 circles, you're processing roughly ₦500 million monthly (50 circles × ₦1 million × 20 months amortised). Your costs are ₦7.2 million annually. Your revenue is ₦150 million. Gross margin is 95%. This is why Ajo and Esusu are winning.

The unit economics break if you try to do too much: adding interest products, lending, insurance, investment features. Each feature adds complexity, cost, and regulatory risk. The founders who are winning are the ones who stayed disciplined.

The FX angle that most founders miss

If you're building ajo for diaspora or cross-border use, FX strategy for Nigerian startups earning in dollars becomes critical. Here's why:

A Ghanaian trader and a Nigerian trader want to run a circle together. The Nigerian contributes in naira. The Ghanaian in cedis. When the pot is drawn, both need to receive in their home currency. If you're not managing FX exposure, you'll eat the spread. If you are, you can monetise it.

Flutterwave and Paystack handle this for you at scale, but you need to understand the mechanics: you're not just moving money; you're managing currency conversion risk. Some platforms lock rates at the time of contribution. Others lock at payout. The difference is your margin.

For a 20-person circle with 10 Nigerians and 10 Ghanaians, the FX upside is real. And it's one of the reasons Esusu's lending product works—they can charge a spread on cross-border credit because they're managing FX risk.

Building for retention, not just acquisition

The fintech graveyard is full of apps with high acquisition and zero retention. Ajo is different because it's inherently sticky: you're locked in for the duration of the circle. But what happens after?

The winners are building for sequential circles. You complete one 20-month circle, and you're immediately offered a second one—maybe with different terms, maybe with the same group. Esusu does this. Ajo is moving in this direction.

The math is compelling: if 60% of your users complete a second circle within 3 months of finishing their first, your lifetime value per user doubles. Your CAC becomes negligible. This is where the real defensibility is.

The regulatory reality

You don't need a banking license to run digital ajo in Nigeria. You need:

1. A Fintech Regulatory Sandbox approval (from the CBN, if you're doing anything beyond pure peer-to-peer transfers)
2. Payment processor partnerships (Paystack, Flutterwave, or Moniepoint will handle settlement)
3. KYC/AML compliance (you need to know who's in your circles, especially at scale)
4. Data protection (NDPR compliance is non-negotiable)

The CBN's 2023 guidelines are clear: if you're holding customer funds (even temporarily), you need to be in the sandbox or licensed. If you're just facilitating transfers (money never touches your account), the bar is lower. Most successful platforms are in the sandbox.

Regulatory risk is real, but it's also a moat. If you get it right early, competitors will struggle to catch up.

The next wave

By 2027, we'll likely see:

1. Consolidation. Ajo and Esusu will probably acquire smaller players or merge. The market will support 2-3 major platforms, not 10.

2. Vertical expansion. Successful platforms will move into lending, insurance, and investment products—but only after proving they can scale ajo profitably.

3. Geographic expansion. Ghana, Kenya, and Cameroon are ripe for digital ajo. The platforms that expand early will own those markets.

4. Institutional adoption. Banks and fintechs will embed ajo as a feature, not build it as a standalone product. Kuda might add it. Opay probably will.

5. Data monetisation. Once you have data on 100,000 savers' behavior, you can sell insights to lenders, insurers, and employers. This is where the real revenue is in 5 years.

FAQ

Q: Is digital ajo actually safer than physical ajo? A: Yes, if the platform is regulated and holds funds in a segregated account. You have a digital record, transaction history, and recourse if something goes wrong. Physical ajo relies entirely on trust and social pressure. The trade-off is that you pay a commission (1-2%) for that safety.

Q: Can I run my own ajo circle on these platforms, or do I have to join an existing one? A: Both platforms let you create your own circle and invite people. You don't pay a fee to create it; the platform takes a small commission (usually 1-2%) when the pot is drawn. You control who joins and the contribution amount.

Q: What happens if someone in my circle can't pay their contribution? A: Most platforms have a grace period (usually 3-7 days). If payment doesn't come through, the person is removed from that month's draw and can rejoin the next month. Some circles have rules (set by members) that penalise missed payments. It's up to the group.

Q: Can I use ajo to save towards a specific goal, like a business or wedding? A: Yes, but that's just how you use the platform. Ajo itself doesn't have goal-tracking features. You're saving a lump sum and deciding what to do with it. Some platforms (like Esusu) let you label your circle ("wedding fund," "business capital") for personal tracking, but the mechanics are the same.

Q: Is there tax on ajo winnings? A: Technically, no—you're not earning income; you're receiving your own money back. But if you're running a circle and taking a commission, that's income and should be taxed. Most individual participants don't report ajo to the tax authority, which is a gap the FIRS will probably close in the next 2-3 years.

What to do next

If you're thinking about building in this space, start here:

1. Understand the unit economics. Run the numbers for a 500-circle operation in a specific market (Lagos, Kano, Accra). Know your CAC, LTV, and payback period before you write a line of code.

2. Pick a wedge. Don't try to be everything. Pick one customer segment (diaspora, rural traders, corporate employees, market associations) and own it. This is how Ajo and Esusu won.

3. Study the regulatory path. Talk to founders who've been through the CBN sandbox. Understand the compliance cost. Budget for it. It's not optional.

For more context on how money moves in Nigeria's fintech ecosystem, read how diaspora Nigerians actually send money home in 2026 and explore the opportunities in rural fintech in Nigeria. If you're building cross-border, FX strategy for Nigerian startups earning in dollars is essential reading.