How social media donations to cover funeral costs cause financial distress

Dar es Salaam. In the past, news of an individual’s death might have taken months or even years to reach old schoolmates, but with the advent of alumni WhatsApp groups and other social media platforms, this information now spreads instantly, initiating funeral contributions almost immediately.

While such contributions may be manageable for well-to-do individuals, they have placed a heavy financial burden on those with meager incomes.

The latest FinScope Survey 2023 reveals that individuals with low incomes or inadequate savings are often forced to access loans from Community Microfinance Groups (CMGs) to pay for funeral contributions. In fact, 49 percent of respondents who accessed emergency loans from CMGs did so to cover funeral expenses.

Although CMGs were previously classified as informal, the 2023 survey identifies them as non-bank formal financial institutions.

Ms Miriam Msuya, a resident of Tegeta, shares her experience with the financial pressure caused by funeral contributions: “Currently, a contribution for funerals is unavoidable, the list of contributors is kept, and since low-income citizens are always the victims when a disaster occurs, financial issues become a challenge, therefore support from family, relatives, and friends is important.”

She further explains how the ease of access and affordability of loans offered by these groups has helped her and others cope with emergency financial challenges caused by funeral contributions.

However, for some members, the pressure to contribute to numerous funerals has led to accumulating debts, with certain groups even blacklisting those who fail to contribute to a certain number of funerals.

“Some group members find themselves having a lot of debt because the loans do not pay off, and the pressure is high. In fact, there are some groups if you have not contributed to five disasters, you are blacklisted.”

The FinScope Tanzania 2023 Survey indicates a rise in the uptake of formal financial services, with mobile money services accounting for a significant 72 percent of financial inclusion, followed by commercial bank services at 22 percent.

CMGs accounted for 12 percent. The increasing availability and use of mobile money services have facilitated funeral contributions through group loans, exacerbating the financial burden on low-income individuals.

Walter Fadhili, a resident of Kiluvya, shares his experience of the financial strain caused by funeral contributions: “Death happens when one doesn’t have savings, so in order to be understood in society, one has to borrow at least Sh50,000 to fulfill that need.

There are times I even take high-interest loans so that I can contribute; the level of poverty will continue to be a part of the lives of some people due to a lack of income.”

Ms Rehema Mohammed, a small trader at Mbezi Luis, says she has witnessed colleagues resorting to community group loans to pay funeral contributions.

“Personally, I have never taken out a loan in my community group to pay funeral contributions, but I have seen my colleagues doing so,” she says.

Experts in social welfare and economics have pointed out that globalization and societal expectations are significant contributors to the rise in funeral expenses.

People are now compelled to spend more on funerals, including travel expenses and tailor-made uniforms.

As a result, many individuals are turning to quick loans to meet these financial demands.

Ms Teofrida Mbilinyo, a social welfare expert, believes that the circulation of money has been low, pushing people towards community groups where they can quickly secure loans and pay contributions for funerals.

Additionally, globalization has contributed to the increasing expenses associated with funerals. Ms Mbilinyo explains, “At a funeral, apart from paying contributions, you will have to wear a uniform and travel because the person who is facing that challenge was a close person. All these are expenses; if you don’t have savings, you must find an alternative way of getting quick money.”

However, the lack of proper financial literacy has resulted in borrowers being unable to repay high-interest loans, leading to the loss of their belongings and financial distress.

There is also the need for financial education at the grassroots level to encourage personal saving and investment.

Another social welfare officer Ms Jasmine Mallya has said social pressure to confirm and to be accepted in the virtual WhatsApp group communities is also partly to blame for the additional financial burdens on individuals and families.

“If you attend a funeral and you have not adorned the special attire selected specifically for the occasion you look somehow odd. To some people this can put pressure to spend more in the next funeral. And if they do not have savings that means borrowing money,” she says.

It is alright for those who can afford it, but for those who do not have savings, it adds to their financial problems.

She attests to the fact that marriages have broken up in instances when one partner takes loans to fund social activities without the knowledge of the other, plunging the whole family into debt.

“The time has come for social workers and community development officers to take responsibility and provide education so that people know the harm and benefits of taking loans that are not productive,” Ms Mallys notes.

Dr Daudi Ndaki, an economist from Mzumbe University, further elaborates on the issue: “We need to change from mindset that an individuals’ problems are the community’s. Because of this culture, people do not prioritize personal saving, assuming that the community will always provide support during difficult times.”

He says that basically many low income-earners struggle to get money to deal with disasters mainly due lack of savings, which calls for the need to impart financial literacy to people from a very young age.

He advocates for the promotion of funeral insurance and financial education to encourage a culture of saving and responsible financial decision-making during times of crisis.

By fostering a culture of saving and responsible financial planning, individuals can avoid the pitfalls of accumulating debt to meet societal expectations.

“Financial education must be provided to the community at the grassroots level so that people can move away from traditional ways of spending without saving.”

Financial strain on low-income individuals as a result of funeral contributions through WhatsApp groups is just a microcosm of the bigger financial problems facing Tanzanians.

Concerted efforts from the government and all stakeholders are necessary to bolster the spirit of entrepreneurship and the culture of savings to increasing the spending power of Tanzanians.

Creating a more conducive business environment and improving an investment climate can ultimately lead to more employment and opportunities for self-employment.

But also by promoting a culture of saving and responsible borrowing, the financial pressures arising from funeral contributions can be alleviated, leading to greater financial well-being and stability within communities.