Paper short abstract:

Indigenous usury system remains an enduring informal source of credit dating back to the pre-colonial era, despite its exploitative nature. The paper empirically examined the features of the system within the context of urban Ibadan of southwestern Nigeria.

Paper long abstract:

Indigenous usury system remains an enduring informal microfinance dating back to the pre-colonial era, despite its exploitative nature. The paper empirically examined the features (relevance, accessibility, usage, network, repayment schedule and sanctions) that have sustained contemporary Indigenous Usury System (IUS) among the Yoruba of Southwestern Nigeria. Data were gathered using various qualitative methods while interviewees were purposively selected using the snowballing techniques. Urban Ibadan is the study area. The relevance of IUS in contemporary informal microfinance was predicated on the subjective, but contextual rational interpretation of the system as benevolent-help (aanu). Access to IUS fund is dependent on referral from a trusted guarantor (trader lendee), reputation of a lendee's organization (formal sector workers) and good credit history. Usury lenders finance both economic and social ventures. Repayment default attracts sanctions such as police arrest, incarceration, property seizure, blacklisting, social stigmatization and physical assault. Informal usury system has remained a major source of finance for lendees despite its exploitative nature due to its accessibility which gives it an interpretation of contextualised magnanimity.

Keywords: Indigenous usury system, benevolent-help, Microfinance, Ibadan-Nigeria