Run­ning a stokvel like a busi­ness

Mandla Khu­malo talks to ex­perts about how or­gan­i­sa­tions can be in­no­va­tive and pro­fes­sional

Move! Stokvel - - Contents -

WHETHER you are sav­ing to give your loved ones a de­cent send-off or for big pur­chases or gro­ceries, it is no longer enough for peo­ple to form a stokvel. But what sets stokvels apart is how they are run.


For mem­bers to reap the ben­e­fits, ex­perts ad­vise that stokvels should be run pro­fes­sion­ally, like busi­nesses.

Dr Ab­dul Latif Al­has­san, a lec­turer at the Univer­sity of Cape Town’s Grad­u­ate School of Busi­ness, says it is critical for schemes to de­velop their sav­ing meth­ods be­yond the tra­di­tional ways. Ab­dul says there are en­cour­ag­ing signs show­ing that stokvels are be­gin­ning to in­no­vate.

“From the tra­di­tional func­tions of stokvels as ro­tat­ing sav­ings and credit as­so­ci­a­tions, the con­cept is based mostly on trust and peer pres­sure to mon­i­tor the be­hav­iour of its mem­bers as an in­for­mal or­gan­i­sa­tion,” says Ab­dul.

“How­ever, in re­cent times, stokvels are be­ing de­vel­oped along the lines of mod­ern fi­nan­cial ar­range­ments where the op­tion of in­vest­ments are in­cluded in the for­malised stokvels. These there­fore ne­ces­si­tate the in­sti­tu­tion of an ex­ec­u­tive body to man­age the in­vest­ments of mem­bers in the as­so­ci­a­tion.” Ab­dul says the or­gan­i­sa­tional struc­ture is also cru­cial to pro­mote trans­parency and ac­count­abil­ity.


He says ac­count­ing and au­dit­ing func­tions are also cru­cial be­cause the stokvel groups’ fi­nances are be­com­ing more com­plex with time.

“( These) are very critical to sus­tain the ba­sic foun­da­tions of the as­so­ci­a­tion like trust,” says Ab­dul.

“This also helps in at­tract­ing new mem­bers and in­creas­ing the ben­e­fits, the pe­ri­odic or ro­tat­ing large sum pay­ments, of mem­bers.

This in­creases the fi­nan­cial ben­e­fits to the mem­bers and con­tin­u­ous abil­ity to con­trib­ute to their mem­ber­ship scheme.”

But con­fronted with the un­pre­dictable changes to the global econ­omy and in­di­vid­ual mem­bers’ cir­cum­stances, it could be dif­fi­cult for the tra­di­tional stokvel groups to sur­vive fi­nan­cial storms.


To counter this, they need to set up in­vest­ment arms to fully pro­tect them­selves from tough eco­nomic con­di­tions.

“The mod­ernised ver­sion of the stokvel could re­sort to in­sur­ance and other risk man­age­ment mech­a­nisms to smooth out the ef­fects of bad eco­nomic and hu­man con­ducts,” ad­vises Ab­dul.

“In this case, not all in­vest­ment re­turns will be passed on to the mem­bers. Hence, in terms of lower re­turns, the pro­vi­sions set aside from pe­riod of high re­turns could be used as a top up.”

Fi­nan­cial well­ness ex­pert Andile Fu­lane, who is also chief ex­ec­u­tive of Seed of Pros­per­ity, shares Ab­dul’s sen­ti­ments.

Andile says stokvels can use sim­ple book­keep­ing sys­tems which al­low mem­bers to make con­tri­bu­tions to the bank ac­count from their cell­phones and see the bal­ances. “When a mem­ber can­not af­ford to con­trib­ute any­more it must be clear what should be done, even in the event of a mis­con­duct by one mem­ber,” said Andile.

“Nor­mal cases would be sent to the small claims court in cases where fraud­u­lent ac­tiv­i­ties are claimed. It is im­por­tant that stokvel mem­bers don’t take the law into their own hands.”


Ri­aan Ap­pel­grein, a se­nior man­ager for con­sumer fi­nan­cial so­lu­tions at Stan­dard Bank, em­pha­sised that, al­though stokvels “pro­vide a won­der­ful op­por­tu­nity for peo­ple to save to­gether for a com­mon goal”, the con­sti­tu­tion needs to spell out the ben­e­fits for mem­bers.

Some stokvel groups are be­ing mod­elled on busi­ness prin­ci­ples, are get­ting so­phis­ti­cated, and in­vest in prop­erty and the Jo­han­nes­burg Stock Ex­change (JSE).

Mean­while, pro­fes­sion­als and high earn­ers are also em­brac­ing the sav­ing schemes.

“More and more peo­ple adopt­ing the prin­ci­ples of com­mu­nity sav­ing are do­ing so for pur­poses other than what was the ac­cepted norm some years go,” said Ri­aan.

“Whether higher earn­ers and pro­fes­sional peo­ple are tak­ing to the con­cept of group sav­ing be­cause of the tight­en­ing econ­omy that is dig­ging into even their pock­ets, or be­cause they find it great to ben­e­fit from a lump sum pay­out so that they can meet ma­jor obli­ga­tions has yet to be bet­ter re­searched.

“What is ob­vi­ous, how­ever, is that sav­ings and in­vest­ment clubs are now be­com­ing more com­mon. At Stan­dard Bank we see stokvels be­ing formed to help mem­bers par­tic­i­pate in var­i­ous in­vest­ment ve­hi­cles, in­clud­ing prop­erty and the JSE.”


Ri­aan says banks are stokvel friendly and have made it easy for them to set up group scheme ac­counts. Mem­bers need to turn the peer pres­sure into pos­i­tive ad­van­tage.

“Ev­ery­body is work­ing to­wards a com­mon ob­jec­tive, which is safe­guarded by a stokvel’s con­sti­tu­tion, mak­ing the achieve­ment of pur­pose fun and a topic friendly con­ver­sa­tion,” says Ri­aan.

“It is easy to find a rea­son not to save. But, when you could dis­ap­point fel­low mem­bers or even alien­ate friends by not meet­ing your obli­ga­tions, the pic­ture changes sig­nif­i­cantly.”

When a mem­ber can­not af­ford to con­trib­ute any­more it must be clear what should be done

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