Standard leading the way in stokvel services

STANDARD Bank is the leader in providing banking services to the stokvel community with a 29 percent market share, according to a survey by African Response conducted in 2017.

This sector now has more than R50 billion in deposits with more than 400 000 stokvels with close to 12 million members. The survey found that Nedbank was second with a 19 percent share followed by First National Bank with a 13 percent share and then Absa with an 11 percent share.

The name stokvel originates from the term “stock fair,” which describes cattle auctions run by English settlers in the 19th century. These stock fairs were a platform for farmers and labourers to socialise and pool money together to purchase livestock according to African Response. In essence, they are savings clubs as members of a stokvel come together and make contributions of an agreed amount on a regular basis, usually monthly.

The club asks members to join and decides on how the pool of money is shared, whether it is a rotating lump sum payment to the members or saved and shared at the end of the stokvel period, which is commonly six months or a year. There is a large amount of trust involved.

The group structure helps individuals achieve their savings goals as they are encouraged by stokvel members to meet their monthly obligations to the stokvel. This may be one of the reasons why the personal saving rate became positive in 2017 for the first time since 2005, according to South African Reserve Bank data.

“We’ve seen continued good growth in our society scheme accounts with the value increasing by 9 percent this year and the number of people involved rising by 4 percent,” Standard Bank manager for savings products Malefetsane Michael Ramolahlehi said.

“We’ve had a great response to our monthly R5 000 draw, while the annual draw prize of R50 000 is also getting good traction,” Ramolahlehi added.

Last year, the Old Mutual Savings and Investment Monitor survey indicated that informal savings, of which stokvels comprise 53 percent, were the most popular form of savings and investing, after funeral policies.

Although there is a perception that stokvels are savings clubs for “old women in poor communities”, the reality is that more than four out of five members with an almost equal gender split are gainfully employed with the majority of almost 60 percent coming from the middle income group. As income rises with a fifth of stokvel members coming from the top income bracket, the more likely they will belong to more than one stokvel as they save for different purposes.