– Keep out

Finweek English Edition - - MONEY -

pres­i­dent of the Na­tional Stokvel As­so­ci­a­tion, as “a type of credit union in which a group of peo­ple en­ter into an agree­ment to con­trib­ute a fixed amount of money to a com­mon pool weekly, fort­nightly or monthly” – are noth­ing new in SA. The f irst stokvel is recorded as hav­ing been es­tab­lished in 1932, ac­cord­ing to Ntoyiwa, and from then on, “stokvels have been stereo­typed as struc­tures for the poor black com­mu­nity” but also as “so­ci­eties for the older gen­er­a­tion”.

Yet de­spite th­ese per­cep­tions, stokvels con­tinue to grow in size and are be­ing suc­cess­fully used as in­vest­ment ve­hi­cles for South Africans who pre­fer to place their trust in their com­mu­ni­ties in­stead of for­mal fi­nan­cial in­sti­tu­tions.

“Many South Africans pre­fer stokvels be­cause of the liq­uid­ity of th­ese funds, no forms are needed, and there are no fees in­volved,” ex­plains Lynette Ni­chol­son, Re­search Man­ager at OMSA. “It’s a sys­tem based en­tirely on trust and the whole so­cial as­pect – the accountability to one’s com­mu­nity is what drives [stokvels].”

Tash­mia Is­mail, head of the In­clu­sive Mar­kets Pro­gramme at GIBS, adds that the emo­tional sup­port and strong so­cial el­e­ment as­so­ci­ated with stokvels are “things that for­mal busi­nesses can’t repli­cate”. In­surance com­pa­nies, for ex­am­ple, see stokvels (and more specif ica l l y, buria l so­ci­eties), as a ma­jor com-

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.