Why you need a con­sti­tu­tion

Mpho Diale ex­plains the im­por­tance of hav­ing rules and reg­u­la­tions to guide your group

Move! Stokvel - - Contents -

IT IS es­ti­mated that stokvels con­trib­ute about R45 bil­lion to the coun­try’s econ­omy an­nu­ally. Even though form­ing a stokvel is as sim­ple as find­ing like-minded in­di­vid­u­als and agree­ing on meet­ing times and the con­tri­bu­tion fee, for a stokvel to work ef­fi­ciently, it needs to have a con­sti­tu­tion.


Ac­cord­ing to Mike Brown, the man­ag­ing di­rec­tor of the in­vest­ment com­pany, Ex­change Traded Funds SA, a con­sti­tu­tion is made up of prin­ci­ples that gov­ern how an or­gan­i­sa­tion func­tions. For a stokvel to be le­gal, it needs to have a con­sti­tu­tion.

“Stokvels work with money, but are not con­sid­ered to be fi­nan­cial in­sti­tu­tions or ser­vice providers,” ex­plains Mike.

“How­ever, ac­cord­ing to the govern­ment, they all need a con­sti­tu­tion so they can qual­ify to do cer­tain things, which in­clude col­lect­ing money, in­vest­ing it or in some cases lend­ing money.”


Ac­cord­ing to Mike, draw­ing up a con­sti­tu­tion doesn’t have to be a dif­fi­cult process or a ser­vice that you pay for.

“You just need a ba­sic con­sti­tu­tion that de­fines the kind of stokvel you are, what your in­ten­tion is, who the mem­bers are and how much is con­trib­uted per month,” he says.

He adds that if you’re un­sure about where to start, search for a stan­dard con­sti­tu­tion on­line.

You can use this as a guide­line to draw up your stokvel’s con­sti­tu­tion

and make changes that speak di­rectly to your stokvel.


Start your con­sti­tu­tion by stat­ing the name of your stokvel. Ex­am­ples of the stokvel’s ob­jec­tives in­clude pro­mot­ing per­sonal and group de­vel­op­ment and sav­ing money.

You also need to state what the money will be spent on or what it will be in­vested in.

You need to state how many mem­bers will be al­lowed and in­clude their full per­sonal in­for­ma­tion like their res­i­den­tial ad­dresses, dates of birth and ID num­bers. When dis­cussing mem­ber­ship, you need to be clear about whether or not a mem­ber’s fam­ily will be al­lowed to re­place them should the prin­ci­pal mem­ber pass away.


■ Stokvel ex­ec­u­tive: You need to men­tion who will be in the ex­ec­u­tive, which must in­clude a chair­per­son, sec­re­tary and trea­surer. The re­spon­si­bil­i­ties of a chair­per­son in­clude pre­par­ing the agenda for meet­ings and lead­ing the meet­ings, and mak­ing sure the stokvel’s rules are fol­lowed by all mem­bers.

The sec­re­tary keeps a record of all ac­tiv­i­ties and acts as the goto per­son for all com­mu­ni­ca­tion within the stokvel, while the trea­surer keeps ac­count of the fi­nances. To main­tain ac­count­abil­ity, all three mem­bers of the ex­ec­u­tive must sign off on all fi­nan­cial de­ci­sions. For ex­am­ple, for your stokvel to ac­cess money, the pa­per­work must be signed by all mem­bers of the ex­ec­u­tive. ■ Meet­ings and con­tri­bu­tions: Other than stat­ing ex­actly when, where and how of­ten meet­ings will be held, you also need to men­tion what time meet­ings start and the penalty for mem­bers who are not punc­tual. You also need to state if spe­cial meet­ings will be al­lowed and the cir­cum­stances that qual­ify for such a meet­ing. Like­wise, you need to be clear about how much each mem­ber con­trib­utes, how you deal with mem­bers who de­fault, and the pro­cesses that need to be in place should a mem­ber de­cide to leave the stokvel. ■ Other fac­tors: These in­clude a code of con­duct, gen­eral rules, con­di­tions un­der which the con­sti­tu­tion can be changed and is­sues re­lat­ing to ben­e­fi­cia­ries.


Mike says con­sti­tu­tions dif­fer from stokvel to stokvel, but there are key is­sues that ev­ery stokvel’s con­sti­tu­tion needs to ad­dress.

“These in­clude where the money will be saved, which bank­ing prod­uct suits the stokvel or an in­vest­ment port­fo­lio,” he says.

He says it’s im­por­tant for the con­sti­tu­tion to be signed by all mem­bers and to ap­point a per­son who will act on the group’s be­half.

“For in­stance, if your stokvel is an in­vest­ment club, you need to ap­point a per­son who will act on your be­half when you deal with fi­nan­cial in­sti­tu­tions.”

There are key is­sues ev­ery stokvel needs to ad­dress

When draw­ing up your stokvel’s con­sti­tu­tion, you need to state who will be in the ex­ec­u­tive

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