Master of Money Management

Stokvels-serious about money

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Mohodisana, gooi gooi’s or Stokvels, whatever you want to call them, they have earned their street creds. Stokvels were considered to be informal savings arrangements between friends and families to cater for expenses like weddings and funerals. Now these savings schemes have become giants in the savings sector. Recent figures show that the cumulative value of Stokvels is over 44 Billion rand and they have over 11 Million members with over belonging to around 850,000 Stokvel associaltions.

Just in case you are new to the concept, Andrew Lukhele, founder and president of the National Stokvel Association of South Africa, describes Stokvels as a “a type of credit union in which a group of people enter into an agreement to contribute a fixed amount of money for to a common pool weekly, fortnightly or monthly”

Interestingly the word Stokvel has its origins in Britain. The word comes from the term “stock fair” which was used to describe auctions of cattle. English settlers in the 19th century set up forums for farmers and workers to socialize and pool resources to purchase livestock. The first recorded Stokvel was referred to as a Bantu Burial Society and was formed in 1932, so they are deeply entrenched in the African community.

The social aspect of Stokvels is alive and well but they are deadly serious about money. They have become such a force that the Johannesburg Stock Exchange now offers courses to help administrators invest the funds.

Joe Blogs Head of XXX says “The growth of Stokvels was largely been influenced by the previously “unbanked”. Low income earners needed a saving scheme that offered them flexibility but more importantly, low costs.

Blogs says “While there is a risk with investing in Stokvels because you are dealing with human foibles (the administrators could go on a spending spree) there is a lot of social pressure to keep things above board. However the risk of administrators running off with the funds has largely been mitigated because banks recognise Stokvels as legitimate entities and provide specialised services to the Stokvel community. For example Standard Bank offers XXXX.

In the past Stokvels were limited to close knit groups who all knew each other but of late, more and more “open” groups have become popular. Now there are online forums and organisations that anyone can join. Big retailers have also seen the opportunity of working with Stokvels by offering specialised services for grocery shopping. For example, Massmart offers discounts of up to 25% and bespoke packing and delivery services.

There are many different types of Stokvels catering for various needs.  Popular ones are burial, birthday and grocery Stokvels but even Taxi owners have used them to help build their fleets.  Each type has implications on how contributions are made and how benefits are distributed. They have developed tight structures and are mostly governed by a strict constitution and they often have elected officials.

Blogs says “being a member of a Stokvel can assist you to be more disciplined in your savings plan as you have peer pressure holding you to your monthly commitment. In addition, a larger pool of money means that you can get better rates of interest. Stokvels are here to stay and they are a vital part of the economy. In an environment where South Africans are traditionally poor savers these schemes provide a beacon of light and there is no doubt that banks are embracing them”


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